Docket: 98-563-IT-G; 98-565-IT-G; 98-566-IT-G; 98-567-IT-G
OGDEN PALLADIUM SERVICES (CANADA) INC., HAMILTON ENTERTAINMENT
AND CONVENTION FACILITIES INC., THE CORPORATION OF THE CITY OF
VICTORIA, THE CORPORATION OF THE CITY OF SAINT JOHN,
HER MAJESTY THE QUEEN,
Reasons for Judgment
These are appeals from assessments for the 1996 taxation year
made pursuant to subsection 227(10) of the Income Tax Act
("Act") for failure to withhold amounts from
payments to a non-resident pursuant to
paragraph 153(1)(g) of the Act and section 105
of the Income Tax Regulations
At the outset, the parties filed an Agreed Statement of Facts
without providing further evidence. That Statement reads as
The Parties wish to set out the facts which are agreed upon and
which apply as well to the following appeals: Hamilton
Entertainment and Convention Facilities Inc. (Court File
98-565(IT)G); The Corporation of the City of Victoria (Court File
98-566(IT)G); and The Corporation of the City of Saint John
(Court File 98-567(IT)G).
The Appeals arise out of circumstances related to the 1996 Elvis
Stojko figure skating show, known as the "1996 Canon Elvis
Tour of Champions" (the "Show").
The Show was produced by a company, resident in the United States
of America, named Marco Entertainment, Inc.
In each city that the Show appeared in, Marco contracted with the
owner of a stadium facility. Although the contracts in each city
differed in form and in some particulars, the substance was the
same. In each case, the contract was termed a "Licence
Agreement". Marco obtained a licence to use the stadium
facility for the day of the Show and contracted for services to
be performed by the owner of the facility. These services
included, production and sale of tickets, providing of ticket
takers, ushers, maintenance staff, sale of food and beverages and
sale of souvenirs, programmes and novelties.
Pursuant to each Licence Agreement, Marco agreed to pay a licence
fee for the use of the facility and the provision of the services
set out in paragraph 4. (In the case of the Ogden Palladium
agreement, the fee payable by Marco would be increased by $5,000
if sales exceeded a particular threshold.) Marco further agreed
to pay additional amounts for the provision by the owner of each
facility of credit card facilities and agreed to reimburse the
owner of each facility in each case for certain other expenses
Each Appellant controlled ticket sales with respect to the Show
to be performed in its respective facility. Tickets were sold to
members of the general public who wished to attend and view the
Show, and the proceeds of such sales were received by the
The Show took place, as contemplated by the several License
[sic] Agreements, in the facilities of each of the
In anticipation of the receipt of funds from the Appellants,
Marco applied to the Minister for a waiver of the withholding
required pursuant to section 105 of the Regulations. This request
for a waiver was denied. A similar request for a waiver was
granted to Marco in 1995.
After the conclusion of the Show in each city, each Appellant
prepared a document called a "Settlement Sheet", in
which it set out the revenues generated by the Show and by other
activities such as the sale of souvenirs. The Settlement Sheet
also totalled the charges incurred by Marco for the use of the
facility and for the other fees agreed to. A calculation was then
made of the amount due to Marco, and that sum was remitted to
There is no dispute as to the amounts remitted by each Appellant
to Marco, which are as set out in the Respondent's Reply to
each Notice of Appeal.
None of the Appellants withheld any amount pursuant to paragraph
153(1)(g) of the Income Tax Act or Section 105 of the
The Appellants believed, and still believe, that Marco did not
provide services to the Appellants and therefore they, as payors,
had no obligation to withhold taxes. The Appellants believe that
the sale of a ticket to a member of the public is a grant of a
license [sic] to the ticket holder to attend at the
facility and to occupy a reserved seat for the purpose of viewing
the Show. The Respondent believed, and still believes, that the
Show consisted of the provision of entertainment services, that
the amounts paid to the Appellants by the ticket holders were
paid to view those services, and that the payments made by the
Appellants to Marco were, therefore, payments in respect of
The Minister of National Revenue assessed each of the Appellants
pursuant to paragraph 153(1)(g) of the Income Tax Act and Section
105 of the Regulations, in the amounts set out in the
Respondent's Reply to each Notice of Appeal, and assessed
penalties pursuant to subsection 227(8) of the Income Tax
The basic provisions upon which the Minister of National Revenue
("Minister") relied to assess the appellants read as
Income Tax Act, Part I, Division I – Returns,
Payment and Appeals
Payment of Tax
SECTION 153: Withholding.
(1) Every person paying at any time in a taxation year
. . .
(g) fees, commissions or other amounts for services,
. . .
shall deduct or withhold therefrom such amount as is
determined in accordance with prescribed rules and shall, at such
time as is prescribed, remit that amount to the Receiver General
on account of the payee's tax for the year under this Part or
Part XI.3, as the case may be, and, where at that prescribed time
the person is a prescribed person, the remittance shall be made
to the account of the Receiver General at a financial institution
. . .
Income Tax Act, Part XV – Administration and
(8) Penalty. Subject to subsection (8.5), every person who in
a calendar year has failed to deduct or withhold any amount as
required by subsection 153(1) or section 215 is liable to a
(a) 10% of the amount that should have been deducted or
withheld; or . . .
Income Tax Regulations – Part I – Tax
105. (1) Every person paying to a non-resident person a fee,
commission or other amount in respect of services rendered in
Canada, of any nature whatever, shall deduct or withhold 15 per
cent of such payment.
The issues are twofold:
(1) What was the nature of the payments made by the appellants
to Marco? Were the payments to Marco in respect of services
rendered in Canada?
(2) Are the penalties charged under subsection 227(8) exigible
from the appellants?
According to counsel for the appellants, Marco did not provide
services to the appellants in Canada. He submitted that it was
rather the appellants that provided services to Marco by virtue
of the Licence Agreements. Counsel argued that for there to be a
withholding tax exigible on payments made to Marco, there would
have to have been a payment for services provided by Marco.
Counsel referred to the decision of the Ontario Court (General
Division) in Livent Inc. (Re), 42 O.R. (3d) 501, 
O.J. No. 5268 (Q.L.), affirmed by the Court of Appeal of Ontario
46 O.R. (3d) 458, in arguing that the contract entered into
between the ticket holder (the public) and the owner of the
facility (Marco through the appellants) is not a contract for the
purchase of services. The issue before the Court in that case was
whether the ticket holders were entitled under the terms of the
Consumer Protection Act to reimbursement for purchased
tickets when Livent Inc. cancelled scheduled performances
of Livent Inc. productions and events that were to be
presented by the renters of a theatre. If there were a contract
for the purchase of services between the ticket holders and
Livent Inc., the ticket holders would be entitled under
the Consumer Protection Act to priority over general
contractors for the refund of the price of their tickets.
The Ontario Court (General Division) held that the nature of a
contract between the purchaser of a ticket and the seller is
simply the giving of a right to the ticket holder to attend and
watch a performance and not the obtaining of services by the
ticket holder. The Court was of the view that the services of the
performers who were in fact providing the entertainment were
provided to the producer not to the ticket holders. This is
expressed in the following terms at page 4 (Q.L.) of the
. . . I am not satisfied that the contract entered into
between the ticket holder and Livent is a contract for the
purchase of services. It seems to me that the nature of the
contract is a contract whereby the ticket holder acquires the
right to attend a theatre and to occupy a particular seat for a
particular performance to watch and hear the performance where
the services of the performers are provided but that such
services are provided to the producer not to the ticket holder. .
. . In the context of a performance at the Ford Centre, the
ticket holder does not contract with the performers and has no
direction or control over when the services will be performed or
how they will be performed and, in fact, the services will be
performed whether or not the ticket holder exercises his or her
right to attend the theatre and occupy a seat at the
Counsel for the appellants submitted, relying on the
Livent case, that in the present case services were being
provided to Marco by the entertainers-skaters in the show.
Services were also provided by the appellants in respect of the
show, but Marco, which was acting as the producer did not, as
such, provide any services in Canada.
Counsel for the appellants also suggested that Marco was not
carrying on business through a permanent establishment in Canada.
It was only renting facilities in Canada for a few days.
According to counsel, by virtue of the Canada-US Tax
Convention, Marco was not liable to pay tax in Canada with
respect to the show. Therefore, he submitted, the appellants did
not have to withhold any amount of tax at source. On that point,
counsel referred to Information Circular 75-6R, Required
Withholding from Amounts Paid to Non-Resident Persons
Performing Services in Canada, dated January 15, 1988, which
states the following at paragraph 10:
Applications for Waiver or a Reduction of Regulation 105
Withholding Based on Tax Treaty Protection or Estimated Income
10. The Regulation 105 withholding does not represent a
definitive tax, rather the withholding is considered a payment on
account of the non-resident's overall tax liability to
Canada. Where the non-resident can adequately demonstrate, based
on treaty protection or estimated income and expenses, that
withholding normally required is in excess of the ultimate
Canadian tax liability, the Department may reduce withholding
also submitted that the penalties should be cancelled whatever
the decision on the appellants’ obligation to withhold. He
invoked the due diligence defence based on the fact that Marco
was granted a waiver for the previous year and based on a
common-sense reading of the Licence Agreements, which indicate
that the services were being provided to Marco and not by
for the respondent submitted that there was a payment made by the
appellants to Marco. The question to be asked therefore is: was
that payment made for or in respect of services rendered in
submitted that the expression "in respect of" has a
broad meaning. He referred to the Supreme Court of Canada
decision in The Queen v. Savage,  2 S.C.R. 428,
where the following was stated at page 440:
. . . In Nowegijick v. The Queen,  1 S.C.R. 29
this Court said, at p. 39, that:
The words "in respect of" are, in my opinion, words
of the widest possible scope. They import such meanings as
"in relation to", "with reference to" or
"in connection with". The phrase "in respect
of" is probably the widest of any expression intended to
convey some connection between two related subject matters.
counsel's view, it is not relevant to determine to whom the
services were rendered. As long as funds were remitted to a
non-resident (Marco) in connection with entertainment services
rendered in Canada (the show), there was an obligation to
withhold pursuant to paragraph 153(1)(g) of the Act
and section 105 of the Regulations. It is the payment
of the funds which triggers the obligation to withhold; that
obligation has nothing to do with the matter of whom the services
were performed for.
Commenting on the Livent case, counsel for the respondent
submitted that that case was decided within the ambit of the
Consumer Protection Act only. Counsel argued that the
ticket holders would not have bought tickets if entertainment
services were not going to be provided.
 In the
absence of services performed, there would have been no sale of
tickets. According to counsel, it would be pedantic to submit
that because the ticket holder did not purchase services (as
contemplated in the Livent case), the payment of funds
from the ticket holder to the appellants and then to Marco was
not done in connection with or "in respect of" those
services which were to be performed, as contemplated by the
referred to the decision of the Federal Court, Trial Division in
Mollenhauer Limited v. The Queen, 92 DTC 6398, in which it
was held that an employee does not have to be performing services
as an employee of the payor in order to trigger the payor's
obligation to withhold. Teitelbaum J. said the following at pages
It is very clear that s. 153(1) of the Act does not speak of
whether persons doing the paying are employers or not. I am
satisfied that if a person or company is paying "salary or
wages or other remuneration" it must deduct or withhold the
required amount pursuant to the Income Tax Act.
. . .
I adopt, for the purposes of the case at bar, the words of Mr.
Justice Berger in the case of In re Bankruptcy of G. & G.
Equipment Co. Ltd. (supra) where at page 6408 he
The question then is whether G. & G. was a "person
paying . . . wages . . . to an . . . employee". . . .
I think the Department must succeed. Section 153 says that
every person paying wages to an employee must withhold tax, it
doesn't say that only employers must. The language must be
taken to have been deliberately chosen, and to have been intended
to encompass the kind of situation that exists in the case at
drew an analogy with paragraph 153(1)(g) of the Act
and section 105 of the Regulations which state that
"every person paying" amounts for or in respect of
services must withhold the required amount pursuant to the
Act, and this includes, in counsel's view, the
 In regard
to the appellants' alternative argument that Marco did not
have a permanent establishment in Canada, thus bringing the
treaty into play, counsel submitted that there was no evidence
before the Court as to the scope of Marco's activities in
Canada in 1996, so that that issue could not be properly
addressed. Besides, that argument was not originally pleaded by
the appellants and the appellants did not refute the allegation
in the Replies to the Notices of Appeal to the effect that Marco
was carrying on business in Canada in 1996. Counsel submitted
however that, even if it were decided that Marco was not carrying
on business in Canada, the assessment would still be valid under
Part XIII of the Act on the basis of paragraph
212(1)(d). Arguably, the amount paid to Marco was an
amount paid in respect of property or a licence relating to real
property (indeed, the appellants rented a facility to Marco which
in turn, through the appellants, sold to the public a licence to
enter). In that case, the appellants would still have had an
obligation to withhold an amount at source from any payment
covered by paragraph 212(1)(d) of the Act that was
made to a non-resident not carrying on business in Canada.
respect to penalties, counsel suggested that there was no
evidence concerning the steps taken by the appellants to satisfy
themselves that they had no obligation to withhold. On the
contrary, Marco requested a waiver for 1996 and it was denied.
The appellants could not take it upon themselves not to make the
withholdings. Therefore the penalties are justified.
 I will
deal first with the alternative argument raised by the
appellants, that is, that the appellants had no obligation to
withhold given that Marco might not have any Canadian tax
liability in 1996. I am of the opinion that these appeals concern
the appellants' obligation to withhold, not Marco's tax
liability. Section 105 of the Regulations is in my
view intended to cover precisely the type of case that we have
here. Indeed, where a payment is made to a non-resident in
respect of services provided in Canada, section 105 of the
Regulations requires the payor to deduct or withhold 15
per cent of the payment, and the amount thus withheld is to be
remitted to the Receiver General on account of the payee's
tax for the year under Part I of the Act. If by virtue of
a tax treaty (in the present case the Canada-US Tax
Convention) the payee is not liable for tax under Part I, as,
for example, where the payee does not have a permanent
establishment here in Canada, the amount so paid on account of
tax may be recovered by the payee by filing an income tax return
 In a
recent article, entitled "Non-Residents Rendering
Services in Canada: Regulation 105 and Other Issues",
(1999), Vol. 47, No. 5 Canadian Tax Journal
1321-1341, Shannon L. Baker and Dale S. Meister state the
following at pages 1323 and 1330:
In effect, the withholding under regulation 105 is an
instalment in respect of the non-resident's potential
Canadian tax liability.
. . .
Many non-residents may expect that payments to them should not be
subject to withholding because they do not have a permanent
establishment in Canada. Revenue Canada does not agree, taking
the position that
[t]he Regulation 105 withholding does not represent a
definitive tax, rather the withholding is considered a payment on
account of the non-resident's overall tax liability to
Canada. . . .
Although most tax treaties between Canada and other countries
provide for some relief from Canadian tax, Canada normally does
not relinquish its right to withhold pursuant to the provision of
section 153 of the Income Tax Act and subsection 105(1) of the
Income Tax Regulations.31
If the non-resident is not subject to Canadian tax, it must apply
for a refund by filing a Canadian tax return. If Revenue Canada
is satisfied that the non-resident does not have a permanent
establishment and is not subject to Canadian tax, the withheld
amount will be refunded. However, if Revenue Canada contends that
the non-resident carries on business in Canada through a
permanent establishment and is therefore subject to Canadian tax,
it can apply the amount withheld to the non-resident's
Canadian tax liability.
. . .
Whether or not the non-resident is subject to tax in Canada,
the required remittance under regulation 105, along with the
requirement to file a Canadian tax return, will provide Revenue
Canada with an opportunity to examine the
non-resident’s activities in Canada. At a minimum, it
ensures that Revenue Canada has a portion of the
non-resident’s gross revenue to compensate for any taxes
not properly remitted.
Information Circular 75-6R, "Required Withholding
from Amounts Paid to Non-Resident Persons Performing Services in
Canada," January 15, 1988, paragraphs 10-11.
 So even
if Marco did not have a permanent establishment in Canada in 1996
– which, I agree with counsel for the respondent, is a
claim unsupported by any evidence – that would not have
changed the appellants' obligation to withhold at source, for
the onus remains on the non-resident to prove to Revenue Canada
that he or she is not subject to Canadian tax. If successful in
so proving, the non-resident must apply for a refund by
filing a Canadian tax return.
 There now
remains the main question as to whether the payment made by the
appellants to Marco was for or in respect of services rendered in
Canada. In the affirmative, the appellants had an obligation
under the Act to withhold an amount at source. The
appellants put great emphasis on the matter of who performed
services for whom in the present case. They stressed the fact
that Marco did not provide any services in Canada. I agree with
counsel for the respondent, however, that the legislation does
not specify who has to render the services in Canada. I am of the
view that, as long as services are rendered, section 105 of the
Regulations applies if a payment is made to a non-resident
in respect of those services.
the way section 105 is drafted leads to that broad
interpretation. As the Supreme Court of Canada said in the
Nowegijick case, the phrase "in respect of" is
probably the widest of any expression intended to convey some
connection between two related subject matters.
appellants claim that there were no services rendered in Canada
for which they paid Marco. Among the definitions of the word
"service" found in The New Shorter Oxford English
Dictionary are the following:
service IV 18 Provision of a facility to meet the needs
or for the use of a person or thing. ME. †
19 A person's interest or advantage. LME-M18.
20 Assistance or benefit provided to someone by a person
. . .
27a The organized system of providing labour,
equipment, etc., to meet a public need such as health or
communications; . . . c The supply of programmes by a
broadcasting organization, esp. on a specific wavelength. E20.
d Econ., in pl. The sector of the economy
that supplies the needs of the consumer but produces no tangible
goods, as banking or tourism.
Taylor v. M.N.R.,  2 C.T.C. 2227, Judge Rip of this
Court interpreted the word "services" as follows at
Even accepting the appellant’s characterization of the
matter, the term “services” refers not to the final
product or end result of a transaction, but rather to the process
by which this is achieved.
Revesby Credit Union Co-Operative Ltd. v. Federal Commissioner
of Taxation, (1965) 112 C.L.R. 564, the High Court of
Australia stated the following at page 577:
The Shorter Oxford Dictionary defines “service” as
“the act of helping or benefiting”, and in the
plural, “friendly or professional services”. This is
a broad definition. It would include all the things contemplated
by the word “services” in the common phrase
“goods and services”. It would include any
consideration given in the performance of any ordinary commercial
contract, as well as all those activities more specifically
called services, which do not actually involve the production or
processing of goods, for instance, banking and financing,
transportation, and insurance.
appellants argued that Marco was a producer and as such did not
render services. The New Shorter Oxford English Dictionary
defines the word "produce" as follows:
produce 1 . . . b Introduce (a person or
thing) to. Now spec. bring (a performer or
performance) before the public (cf. sense 3e below). . . .
3 . . . e Administer and supervise the making of (a
play, film, broadcast, etc.); supervise the making of (a record),
esp. by determining the overall sound. L19.
 In my
opinion, a producer of a show can be viewed as rendering
services. Indeed, the producer can be defined as the one who
administers and supervises the making of the show that will be
presented to the public. He is part of the process by which the
show can be brought about (this meets the definition of
“services” given in the Taylor case,
supra). In my view, the producer is providing assistance
in presenting the show for the benefit of another (the
Strayer J. stated in Kraft Ltd. v. Registrar of Trade
Marks (1984), 1 C.P.R. (3d) 457 (F.C.T.D.) at pages
[W]hen faced with an absence of any definition in the [Trade
Marks] Act and any binding jurisprudence, I can see no reason why
the Registrar should impose a restrictive interpretation on the
word “services” as added to the Trade Marks Act in
The same can be said for the interpretation of the word
“services” for the purposes of the Act, which
does not define “service”.
Xerox of Canada Ltd. v. Ontario Regional Assessment
Commissioner, Region No. 10 (1980), 17 R.P.R. 72 (C.A.), it
was said, at page 96:
[The Assessment] Act [R.S.O. 1970, c. 32] deals
with the assessment of businesses and it therefore follows that
the words “goods” and “services” are used
in their ordinary commercial sense. . . . As distinguished from
“goods”, “services” are intangibles; they
are the work of the hand or the brain, valuable to the purchaser
or user but not in themselves articles of trade or commerce.
The extended definitions of service . . . are inapplicable and
the word “services” must bear its ordinary meaning of
being the product of the work of the person supplying it.
 The show
is an intangible; it is the final product of the work of the
person supplying it, that is, it is the final product of the
combined work of the performers and the producer, and of the
process by which the show is brought about. Without the producer,
the show would not take place except if the performers acted as
their own producer.
 It might
be argued that Marco did not provide services to the appellants
(the licence agreements were not filed in evidence, which
rendered detailed analysis difficult in the circumstances). But
even if that were so, it would not change the fact that Marco, as
producer, was providing services for the benefit of the
 In the
Livent case, the nature of the contract entered into
between the ticket holder and Livent was analyzed from the
perspective of the ticket holder’s right under the
Consumer Protection Act.
 It was
held that the ticket holder was not purchasing services but
rather a right to attend a theatre and to occupy a particular
seat for a particular performance to watch and hear the
performance where the services of the performers were provided.
The Court also stated that such services were provided to the
producer not to the ticket holder.
 I note
that in the Livent case it was accepted that the
performers were providing services. The Court however specified
that those services were provided to the producer not to the
ticket holder. The Court seems to have relied on the fact that
the ticket holder did not contract directly with the performers
and had no direction or control over when or how the services
were to be performed, and on the fact that the services would be
performed whether or not the ticket holder exercised his or her
right to attend the theatre and to occupy a seat at the
performance. The Court is not saying that the producer was not
providing services. It is saying that what the ticket holder was
purchasing was not the services provided but rather a right to
attend a theatre for a particular performance.
 In my
view, this interpretation, given in the Livent case, does
not alter the fact that the producer is providing services for
the benefit of the public as a whole. Indeed, the public would
not buy tickets if no services were provided. As a matter of
fact, Ground J., who gave the reasons for the Ontario Court
(General Division) in the Livent case, does not appear to
have been certain that what the ticket holder purchased was in
fact a licence and not services. He says at page 5
Accordingly, even if the contract between Livent and the
ticket holder is interpreted to be a contract for the purchase of
services, it is not in my view a proposed purchase in that the
purchase is completed at the time the ticket is obtained because
at that time the ticket holder has purchased or acquired an
enforceable right to attend a future performance or failing
performance, to claim rescission of the contract and repayment of
the ticket price.
 In any
event, it was recognized at least that the performers were
providing services and in the present case those entertainment
services were undoubtedly rendered in Canada. It is obvious in my
view that the payment to Marco was in respect of services
performed in Canada. If the performers had not performed services
in Canada, no tickets would have been sold and no money would
have been remitted to Marco.
 In the
circumstances, I am of the view that the appellants made payments
to Marco for or in respect of services rendered in Canada.
Accordingly, the appellants had an obligation to withhold the
proper amounts pursuant to paragraph 153(1)(g) of the
Act and section 105 of the Regulations.
respect to the penalties, there is no dispute between the parties
that a defence of due diligence is available to the appellants if
they can make out that defence (this is supported by the Federal
Court of Appeal's decision in Canada (Attorney General) v.
Consolidated Canadian Contractors Inc.  1 F.C.
 The issue
then becomes one of whether the appellants can positively prove
that all reasonable care was exercised to ensure that errors not
be made (see Pillar Oilfield Projects Ltd. v. The Queen,
 G.S.T.C. 49 (T.C.C.)). This Court has said that a taxpayer
is expected to comply with the requirements of the Act
with a high degree of diligence, using the sources of
information, facilities and resources available to that taxpayer.
(See Bennett v. The Queen, 96 DTC 1630 and Somnus
Enterprises Ltd. v. The Queen,  G.S.T.C. 4.)
 In the
present case, I agree with counsel for the respondent that the
appellants did not produce any evidence as to the steps they took
with respect to their withholding obligation. Counsel for the
appellants contended that the appellants had obtained advice from
their professional advisors and that the appellants were
justified in believing that no tax was payable by Marco just on a
common sense interpretation of the Licence Agreements.
 I wonder
why those agreements were not filed in evidence if counsel wanted
to rely on them to invoke the due diligence defence. Certainly,
without having those agreements in evidence it is very difficult
for me to evaluate the correctness of the interpretation put
forward by counsel for the appellants.
Furthermore, no evidence was adduced other than the Agreed
Statement of Facts. I do not see in that Statement anything to
the effect that the appellants consulted professional advisors
before making their decision not to withhold any amount on the
payments made to Marco. There is no evidence before me regarding
what the appellants did once Marco's request for a waiver was
appellants, as payors, had a duty to ensure that they had
fulfilled all their obligations under the Act. I see no
evidence showing that the appellants took any action in that
regard. The fact that Marco had obtained a waiver in the previous
year is not a valid defence, as a non-resident is required to
make such a request in advance of the payment to be received. It
is the Minister who has the authority, pursuant to subsection
153(1.1) of the Act to reduce the required withholding
under section 105 of the Regulations.
 It is
only upon receipt of a waiver that a payor is released from the
obligation of withholding an amount from payments made to a
non-resident. Without such a waiver, the payor’s obligation
must stand. The burden remains on the non-resident to show that
no tax is payable in Canada and to request a refund, if any is
 For all
these reasons, I am of the opinion that the appellants did not
discharge their burden of showing that they exercised due
diligence. The penalties shall therefore be maintained.
appeals are dismissed, with costs.
Signed at Ottawa, Canada, this 12th day of March 2001.