If you are paid trade income, you need a specific tax card
If the pay you receive consists of nonwage compensation for work, either fully or partially, you must submit an application for a specific card for this type of income – often called “trade income”. If you only have a tax card for wages and salaries, your customer cannot use it when paying you. Amounts paid as trade income – nonwage compensation for work – are subject to special deductions that are different from those that concern wages.
If you ask for a tax card for trade income, you need to estimate how much income you are likely to receive during the entire year. You can give the same card to multiple customers.
Note: If there is an employer-employee relationship, i.e. an employment contract between the payor and yourself, you need a tax card for wages instead.
See instructions for completing the request for a “wages” tax card.
Tax card for copyright royalties
Royalties for copyright i.e. compensation for use can be earned income subject to tax, or they can be capital income subject to tax.
- If you receive compensation for use and it is deemed to be earned income, you must submit an application for a specific tax card.
- If you receive compensation for use and it is deemed to be capital income, you do not need a tax card. Tax is withheld at the rate of 30%. If a copyright was transferred by way of inheritance or through a last will and testament, or purchased against payment, royalties received from its use are capital income.
Note: If you received royalties or compensation last year and they were taxed as earned income, and this year’s royalties are included in your tax-card calculation on the card you received in December or January for your wages, you can use the card you received. To check whether or not your royalties are included, see the documents enclosed with the card.