CRA accepts that non-resident employees providing services remotely to a Canadian establishment are not subject to Canadian source deductions

CRA accepts that the remuneration of a non-resident employee (e.g., a programmer) working from home is not subject to Canadian source deductions notwithstanding that the physical establishment of the employer to which he or she reports remotely and to which the services are provided is situated in Canada: the place of exercise of employment is where the employee is physically present.

Neal Armstrong.  Summary of 7 December 2012 T.I. 2012-0440411E5 F under Reg. 104.