7 May 1980 Income Tax Severed Letter RRR25 - Canadian non-resident withholding tax on alimony payments to a resident of the United States

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

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This is in reply to your letter of April 1, that has been forwarded to this Department for reply.

It is our understanding from your letter that you are enquiring about Canadian non-resident withholding tax being made from alimony payments to a resident of the United States.

As indicated in the enclosures with your letter, a non-resident withholding tax of 15% is levied on alimony payments made to residents of the United States. A tax credit for foreign taxes paid can be utilized when filing a return required by the U.S. Internal Revenue Code.

Your main area of concern appears to be the applicability of a non-resident tax refund of withholding tax in your situation.

For your information, we have enclosed the following published material that deals with your query;

• 1) Tax Information Pamphlet - Income Tax and the Non-Resident (Pages 5, 6 and 7).
• 2) Information Circular 77-16 (Page 27)
• 3) Interpretation Bulletin IT-163 (Paragraph 1)

It should be noted that Interpretation Bulletin IT-163 does not specifically mention alimony payments but the Income Tax Act was amended in 1974 to include alimony payments in Section 217. The subject Interpretation Bulletin is currently being revised to include alimony as a "qualifying payment" (see paragraph 4 of IT-163).

In summary, a refund of withholding tax, in a particular situation, can only be determined with a knowledge of the tax position of the individual for the year (see last sentence of paragraph 1 of IT-163).

We have also enclosed a 1979 Tax Return & Guide. Of particular interest to you would be the comments in paragraph 67B on page 16.