Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
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89M12358 |
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December 6, 1989 |
| R.J.L. Read |
B.W. Dath |
| Acting Assistant Deputy Minister |
Director |
| Legislative and Intergovernmental |
Business and General |
| Affairs Branch |
Division |
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957-2089 |
Mandatory Deductions at Source for Fishermen
You have asked us to review the issue raised in Mr. Kierstead's memorandum to Mr. Gravelle dated November 28, 1989.
As Mr. Kierstead points out, at the present time payments made to fishermen who are not under a contract of service are not subject to deductions at source. This has led to an exceptionally high level of unpaid accounts. Regulation 105.1 provides a mechanism for withholding on a voluntary basis but its introduction in 1983 has not alleviated the problem.
We note that Mr. Kierstead has not raised any interpretive issues in regard to this problem. The fishermen in question are those that are in a buyer/seller relationship with the seafood processors and consequently the proceeds of the disposition of their catches are not subject to mandatory deductions at source. Farmers are treated in a similar manner with respect to the sale of their produce.
In contemplating legislative changes we would point out that, generally, payments made to individuals in a self-employed relationship with the payor are not subject to withholding since the taxable portion of the payment is normally reduced by expenses laid out to earn income. An exception may be found in paragraph 153(1)(g) of the Act with respect to amounts paid out as fees, commissions and payments for services.
B.W. DathDirectorBusiness and General Division Specialty Rulings Directorate Legislative and IntergovernmentalAffairs Branch
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