Regulation 105 withholding

A buyer who pays a non-resident contractor for work done in Canada may meet it. The CRA quotes paragraph 153(1)(g): every person paying a non-resident a fee, commission or other amount in respect of services rendered in Canada, of any nature whatever, shall deduct or withhold a set percentage of the payment. It notes that, under subsection 105(2) of the Regulations, this does not apply to remuneration of an office or employment described in subsection 100(1).

Reporting and consequences

The CRA says remittance rules sit in subsection 108(1) of the Regulations and that these payments are reported on a T4A-NR slip. Failing to deduct or remit may lead to an assessment of the amount, plus interest and penalty, under section 227. The CRA also describes waivers or reductions, considered under subsection 153(1.1), which may be based on a tax treaty or on an estimated income and expense statement; see its page on non-resident services. This is separate from section 116 withholding on a non-resident seller.

What to ask

• Whether any contractor is a non-resident doing work in Canada
• Whether tax was withheld and remitted in past periods
• Whether a waiver was sought and granted