Canada Withholding Tax on Franchise Fees salaried to U.S. base corporations?
Lets lately vote for instance you are a running a franchise located in Canada for a US base corporation. You rate a monthly franchise payment of a percentage of your revenue. In an example of $100000 of revenue and 3% go to your parent company ($3000), how much should the withholding rates be and how is it calculated?
Answers:
The Canadian Income Tax Act impose a withholding due of 25% of any transmittal by a Canadian to a non-resident if such reward constitutes rent, royalty or payments of a similar moral fibre (including any pay-out for the use of or for the right to use within Canada any
property, invention, trade-name, official document,
trade-mark, design or model, plan, secret
formula, process or other article whatever).
The Canada-U.S. Tax Convention reduces
the withholding rate to 10%.
If I've get the correct above info, the withholding amount should be 300 (10% of $3,000).
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Answers:
The Canadian Income Tax Act impose a withholding due of 25% of any transmittal by a Canadian to a non-resident if such reward constitutes rent, royalty or payments of a similar moral fibre (including any pay-out for the use of or for the right to use within Canada any
property, invention, trade-name, official document,
trade-mark, design or model, plan, secret
formula, process or other article whatever).
The Canada-U.S. Tax Convention reduces
the withholding rate to 10%.
If I've get the correct above info, the withholding amount should be 300 (10% of $3,000).