Income Tax Severed Letters - 2007-11-23

Principales Questions: 1. Un employé non-résident du Canada exerce les fonctions de son emploi à l'étranger. Est-ce que son employeur canadien doit prélever de l'impôt sur le revenu fédéral à la source?
2. Est-ce que l'emploi est un emploi assurable aux fins de l'assurance-emploi?

Position Adoptée: 1. Il y aurait probablement une exemption de retenue à la source sur la rémunération de l'employé si l'employé non-résident n'exerce aucune de ses fonctions au Canada. De plus, l'obligation de retenir un montant en vertu du paragraphe 105(1) du Règlement ne s'appliquerait pas.
2. Si l'emploi est exercé à l'étranger et que l'employé est un non-résident du Canada, l'emploi ne serait pas un emploi assurable.

Raisons: 1. Sous réserve de certaines situations spécifiques, le paragraphe 104(2) du Règlement prévoit une exemption lorsque l'employeur verse une rémunération à un employé qui n'était pas employé au Canada et ne résidait pas au Canada. Le paragraphe 105(1) du Règlement ne s'applique pas aux paiements mentionnés dans la définition "rémunération" figurant au paragraphe 100(1) du Règlement parmi lesquels figure un traitement ou un salaire à un agent ou employé.
2. Article 5 du Règlement de l'assurance-emploi.

Principal Issues: Whether franchise fees paid to a non-resident are subject to withholding tax.

Position: Question of fact.

Reasons: The nature of the payment needs to be analysed.

Principal Issues: After an assignment of more than six months in another country, an individual (who is a regular employee of a company) spent time in Canada followed by another assignment outside Canada of six weeks. For purposes of the overseas employment tax credit, does the qualifying period include the first and the second assignments (assuming that all other conditions are met)?

Position: To include the second assignment in the qualifying period, we would have to consider that the individual met the all and substantially all test throughout the period (all or substantially all of the duties of employment must be performed outside Canada). Therefore, it depends on whether the time spent performing duties in Canada represents more than 10% of all the employment duties.

Reasons: Paragraph 122.3(1)(b) of the Act. Paragraphs 3, 10 and 11 of IT-497R4. John Rooke v. Her Majesty the Queen (FCA) 2002 DTC 7442

Principal Issues: Is employment income, received from the XXXXXXXXXX by Canadian citizens who are residents of Canada and who are not residents of the United States, exempt from taxation in Canada?

Position: The employment income is taxable in Canada.

Reasons: According to subsection 5(3) of the Foreign Missions and International Organizations Act, nothing in subsection 5(1) of the FMIOA exempts a Canadian citizen, residing or ordinarily resident in Canada, from liability for any taxes or duties imposed by any law in Canada. It is not a prescribed international organization for purposes of paragraph 110(1)(f) of the Act.

Principal Issues: Residency status of an international student

Position: General comments. IT-221R3. 250(1) and 250(5) provides rules to determine, respectively, whether an international student is deemed to be resident in Canada and whether the international student is deemed to be non-resident of Canada.

Reasons: For the factual residency issue, it is a question of fact. For the deeming rules dispositions of the Act.