Payments to a Non-Resident (RL-1)

Payments to a Non-Resident (RL-1)

Persons not resident in Canada that perform services in Québec

A person that makes a payment, other than in the course of permanent employment, to a person (including a corporation) not resident in Canada for services performed by that person in Québec must withhold 9% income tax from the payment. Such a source deduction of income tax must be made, for example, from fees paid to a person not resident in Canada, from a purse or share of a purse given to a professional athlete, and from participations paid to a performing artist.

The person making the payment must also file a RL-1 slip: Revenu d'emploi et revenus divers in respect of the payments made to the person not resident in Canada and enter in box O any payments (fees, commissions and other amounts) made for services performed in Québec by a person (including a corporation) not resident in Canada, otherwise than in the course of regular and continuous employment. The code for Box O is RR.

Note

For the purposes of the preceding paragraph, the term "employment" does not include an office.
Directors' fees paid to a non-resident director must be entered in box A of the slip, not in box O.

Every person that fails to withhold 9% income tax from a payment as required becomes a debtor of the State for the full amount that should have been withheld and incurs a penalty equal to 15% of the amount. However, the amount of the source deduction may be recovered from the person not resident in Canada that received the payment, either by bringing an action in a court of competent jurisdiction or by withholding the amount from any amount paid or credited to that person.

Furthermore, if the person performing the services in Québec is an individual who holds a certificate from SODEC attesting that he or she works during the year as a producer on a film production recognized by SODEC, no income tax has to be withheld from the amounts (including salary or wages) paid to him or her with regard to the film production.

An individual or a corporation that does not have an establishment in Québec can make an application for a reduction in source deductions of income tax in writing or by filing form TP-1016. A copy of the contract for services in Québec must be included with the application, which must be made 30 days before the services are to be performed or 30 days before the date of the first payment.