US non-resident Acting in Canada

Tax Topics
1

My clients are a US S-Corporation and its owner-employee-actor that worked in Canada in 2019 and 2020. Acting fees and residuals were paid to the corporation. Canada taxes were withheld from many, if not all, of the payments are rates ranging from 10% to 23%. In 2019 and 2020, income were approx $140,000 and $43,000 CAD respectively with taxes of $23,000 and $7,400.

I’m wondering if it is worthwhile or possible to file Canadian returns for one or both years. If Canada taxes only Canada income. If returns would have to be filed for both the corporation and the individual.

My understanding is that the client can deduct Canada taxes on his US tax returns or claim a foreign tax credit for the actual required paid Canada taxes. Since withholding is an estimate and filing CA returns could generate a refund, I believe he is barred from claiming the US tax credit unless the Canada taxes would be equal to greater than the amounts withheld.

Hope someone can provide insight.

Thanks.

2

You might wish to check the paperwork that was filed when the corp was setting up for people working in Canada.

Based on what you are saying, I suspect that the withholding was made under a Canadian BN, which suggests that Regulation 105 came into play.

If so, the corporation probably signed paperwork which said that they WILL FILE a Canadian Corporate Tax Return.

However, given that this is for an Actor, Article XVI of the Canada-US Tax Treaty may apply with the withholding going to the individual as opposed to the Corporation. Please check the details of the withholding carefully as well as the account number used.