Non Resident Tax Forms for Services Performed in Canada
(T4A - NR)
About the T4A-NR Tax Form
A CRA or tax lawyer should be consulted to determine the recipient’s residency for tax purposes.
Non Residents who carry on business in Canada or who are employed in Canada usually pay taxes in Canada on their income and associated travel expenses from such activities. They are therefore required to file a Canadian income tax return to calculate their Canadian tax liability.
Income earned in their home country would be taxable where they are considered “non-resident for tax purposes”. The following payments are typically reported on the T4A-NR for all provinces:
§ Fees
§ Commissions
§ Other amounts paid to Non Residents individuals, partnerships or corporations in Canada
Recipients performing services in Québec also receive a RL1.
EHT and QHSF are not applicable for payments reported on the T4A – NR
QHSF
Exceptions Reported on a T4
The following exceptions are found on the T4:
§ Director’s Fees paid to Non Residents
§ Residents of other countries who are in a regular and continuous employment relationship in Canada (become residents of Canada for tax purposes).
Tax Calculations
T4A – NR taxes are calculated as follows:
§ Deduction #04 – Fed Tax @ 15% (all provinces)
§ Deduction #05 – Prov Tax @ 9% (Québec only)
§ Reduced tax calculation can be requested through CRA/MRQ
Input Considerations
There are different options that are used for different purposes. Here are the three options and when they would be used:
Option 1: Standard Tax Calculation (one-time payments)
§ Advise earnings on Adjustments screen using T/C 91.
§ The system will use the hard coded rate of 15% Federal and 9% Provincial (Québec only).
§ Advised tax deductions over-ride the system’s % calculation.
Option 2: Block Tax Calculation
§ On the Tax Information tab, check Do Not Calculate beside Federal Tax (DS04 = 1)
§ For Québec, check Do Not Calculate beside Québec Tax (DS05 = 1)
§ See also T4A-NR, Box 23.
§ Complete Reduction Authorized Indicator (NRRA) as required.
Option 3: Regular Payments using Over-ride % Tax
§ Set up Tax Exemptions (DB04/DB05) as 999,999.00, and percentage tax calculation on the Tax Information window (DS04/DS05 = 2, DA04/DA05 = %.0000)
§ Pay recipient with separate payment (T/C 52) or current pay (T/C 85): advise or generate earnings: % on file in the Federal Amount/Québec Amount fields (DA04/DA05) are applied.
§ See also T4A-NR, Box 23. Complete Reduction Authorized Indicator (NRRA) as required.
§ Do Not Use T/C 91 as DA04 is not referenced.
Transaction Code
Transaction codes 52 and 85 will calculate regular pay period taxes unless option 2 or option 3 setups are in place.
Earnings Set-ups
Company Level Mnemonics
CE45 CONSULT C0 00 144111111111111 0
CX45 0
2P20 YE45
Employee Level Taxation
§ If taxable 2 = 4, then T/C 91 calculates Fed Tax (dedn #04) at a flat 15%
§ f taxable 3 = 4, then T/C 91 calculates Prov Tax (dedn #05) at a flat 9%
When taxables 2 and 3 are = 4, TY02 & TY03 include the earnings. The earnings will not appear on a T4 because of 2P20. When taxable 2 and 3 are = 4, deduction #04 is added to YD04; deduction #05 is added to YD05 and RY05.
RY05 is only referenced on Pension Annuity payrolls (see form T4A –RCA)
Other transaction codes will calculate at regular pay period tax amounts unless percentage tax set-up is used (see Option 3) or tax is blacked (see Option 2).
T/C 91 does not reference DA04/DA05. As a result, percentage tax calculations set-up (Options 3) will not work.
If an employee has earning that should display on a T4A-NR and totals that should appear on a T4 then they must have two ID’s, one for the T4A-NR values and the other for the T4 earnings.
Taxation Options
Option 1: Standard Tax for One Time Payments
§ 15% Federal tax (plus 9% Quebec taxes) are standard tax calculations and are typically used for infrequent payments.
§ The transaction code 91 would be used and taxables 2 and 3 must hold a value of 4.
Option 2: Block Tax Calculations
§ The “Do not Calculate” section provides the ability to turn off the Federal and Provincial Tax deduction.
§ Any transaction code could be used since tax is blocked.
Option 3: Use Over-ride Tax Percentage
§ Enter 999,999.00 in tax exemption field and set up percentage tax in the Additional Taxes section.
§ Complete Quebec type and Quebec Amount fields in a similar fashion if required.
§ DO NOT USE transaction code 91
§ Additional taxes set-up (DA04/DA05) is ignored
Non Resident Field Details
Box / Employee Mnemonic / Workforce Now Fields23 / NRRA / Reduction Authorized Indicator
Select appropriate value from drop-down.
0 = Does not participate (no reduction applied)
1 = CRA authorized waiver or reduction of withholding. Payer has received written authorization from CRA to reduce or waive the required withholdings on the gross payment to the Non Resident.
2 = No authorization from CRA. Reduced tax rate applied but unauthorized.
Note: If tax is blocked or a reduced rate is used (Option 2 or 3), ensure the appropriate value is set up in NRRA.
24 / NCTY / City
City where services were rendered.
26 / NPRV or PREM / Province Code
Select Province or Territory where services are rendered from the drop-down list.
Note: NPRV is a reporting field only. Taxation is based on PREM (Province of Employment)
12 / NRDY / Number of Days in Canada
Number of day’s recipient was present (under contract) in Canada including weekends and holidays. (3 digit numeric) Used by CRA to determine tax residency status. Over-rides value in 2P41. Reset to zero on NCYR.
Used as a default if NLOC is blank / FSSN / Foreign Social Security Number
Leave blank if unavailable
11 / NRRT / Recipient Code
22 / YD04 / Income Tax Deducted
27 / NL0C, NTXC & CAN / Location Country Code
Select the 3 character country code from the drop-down list for the country where the recipient is resident for tax purposes.
Note: This is informational only. This will not affect the tax calculation.
16 / NRPN / Professional Name
Used when the recipient’s professional or operating name is different than the real or legal name of the Non Resident. Common in the entertainment and athletic professions.
28 / NICS / Industry Classification Code
Select from appropriate code from the drop-down list.
The following values are valid for this mnemonic: 21, 23, 48, 49, 50, 51, 61, 62, 71, 81 and 91
SLOC / Employee State Code
For magnetic media reporting purposes only. Select the appropriate code from the drop-down list if the recipient has tax residency in the United States.
Prints on paper copy only / Mnemonic assigned at company level / Misc Footnote:
Only visible on paper copies
Box / Employee Mnemonic / Workforce Now Fields
18 / 2P20 / Gross Income
Contains field storing total Gross earnings to be printed on T4A-NR. Typically contains a YE field. Reset to zero on NCYR. Could contain an employee level field if more than one earnings category was set up on payroll (use own codes to total the earnings categories).
20 / 2P35 / Travel Expenses
Contains field storing the total Travel Expenses for a recipient of the T4A-NR. Typically contains a YE field. Could contain an employee level field if more than one earnings was set up on payroll (use own codes total the earnings categories.)
26 / 2P41 / Number of Days Recipient Present in Canada:
Usually blank as the value can input directly at the employee level as a one-time entry to NRDY. Reset to zero on NCYR.
Alternative set-up to NRDY:
Use 2P41 if the set-up includes a dummy earning that allows the company to input the “Days in Canada” each pay period. These dummy earnings would store these values in a YTD field that is referenced in 2P41. The Tax Form program will multiply the result by .01, round to nearest dollar and report position 7 to 9 of the numeric field in Box 26.
Footnote / 2P53 / T4A-NR Footnote:
Contains the chained EM, FM or GM field used to store the footnote at the employee level.
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