Income tax information for non-resident corporations

Schedule 97, Additional Information on Non-Resident Corporations in Canada

A new Schedule 97 has been developed for all non-resident corporations that must file a tax return in Canada to identify the type of income they earned in Canada. Complete Schedule 97, Additional Information on Non-Resident Corporations in Canada and attach it to your T2 tax return if you are a non-resident corporation.

T2 corporation income tax return - Filing requirements

New legislation, enacted in 1999, clarifies that a non-resident corporation must file a T2 return with the Canada Revenue Agency (CRA) if the corporation carried on business in Canada or disposed of a taxable Canadian property (TCP) at any time in the tax year. This requirement applies even if any profit(s) or gain(s) realized are claimed by the corporation to be exempt from Canadian tax due to the provisions of a tax treaty. To claim a treaty exemption for a tax year that began after 1998, the corporation must complete Schedule 91, Information Concerning Claims for Treaty-Based Exemptions, and attach it to the T2 return. More information is available in the T4012 - T2 Corporation - Income Tax Guide.

Schedule 20, Part XIV Tax - Additional Tax on Non-Resident Corporation

Every corporation that is a non-resident and subject to Part XIV has to complete Schedule 20, Part XIV Tax - Branch Tax (2002 and later taxation years) to calculate the Part XIV tax payable. Refer to section 219 of the Income Tax Act for more information as well as IT137R3, Additional tax on certain corporations carrying on business in Canada, and IT137R3SR, Additional Tax on Certain Corporations Carrying on Business in Canada.

Dispositions of taxable Canadian property (certificates of compliance)

If the corporation disposes of TCP, it must separately notify the CRA, and obtain a certificate of compliance. More details are available in Information Circular 72-17R5 Procedures concerning the disposition of taxable Canadian property by non- residents of Canada - Section 116.

Services rendered in Canada (withholding tax)

Any payment received for services provided in Canada is subject to a 15% tax withholding, which must be remitted to the CRA by the person making the payment. This withholding is a payment on account of the corporation's potential tax liability to Canada. To pay any balance owing or to obtain a refund of any overpaid amounts, the corporation must file a T2 return with the CRA.

Registration for a payroll deductions account

The corporation may require a payroll deduction account if, while carrying on business in Canada, it will be making any payment(s) to a non-resident sub-contractor or a non-resident employee. For more information on non-resident sub-contractors and employees, see the T4061, Non-Resident Withholding Tax Guide and the T4001 Employers' Guide to Payroll Deductions - Basic Information.

Part XIII withholding tax

A non-resident corporation carrying on business in Canada may be required to withhold tax under Part XIII of the Income Tax Act if it pays or credits certain kinds of income to another non-resident. More information is available in Information Circular 77-16R4, Non-Resident Income Tax, paragraphs 10 and 11, and the T4061, Non-Resident Withholding Tax Guide.

Part XIII.1 Tax -Additional Tax on Authorized Foreign Banks

Every authorized foreign bank is subject to Part XIII.1 tax equal to 25% of its taxable interest expense for the year. Identify these calculations as Schedule 92, Part XIII.1 tax - Additional tax on Authorized Foreign Banks, since we do not print this schedule. For more information, see section 218.2 of the Income Tax Act.

Registration for corporate income tax

When a corporation registers for the goods and services tax/harmonized sales tax, it will receive a Business Number (BN) from the CRA. The BN should be entered on the T2 return and on all correspondence with the CRA.

Where to get information, returns, guides, and technical references

Our publications, including forms, schedules, information circulars (ICs), and interpretation bulletins (ITs) are available on our Web site at www.cra-arc.gc.ca/forms. They are also available from any tax services office, including the International Tax Services Office (ITSO).

How to reach us
If you have questions about non-resident T2 returns, call the International Tax Services Office at one of the following numbers:

Canada and the U.S.
General enquiries: 1-800-561-7761, ext 9144
Account enquiries: 1-800-561-7761, ext 9155

Outside Canada and the U.S. (collect calls accepted)
(613) 954-9681

Fax number
(613) 952-3845

Regular hours of service
Monday to Friday (except holidays)
8:15 a.m. to 5 p.m. (Eastern Time)

You may write to the International Tax Services Office at:

2204 Walkley Road
Ottawa, Ontario
Canada
K1A 1A8