If you failed to deduct the required amount of the Part XIII tax from the amount you pay or credit to a non-resident, you are liable for this amount even if you cannot recover the amounts. We may assess you for any amount owing. We will also assess a penalty and interest as described in the section below.

Penalty for failure to deduct

The CRA can assess you for the amount of tax that you failed to deduct. The CRA can also assess a penalty of 10% of the required amount of Part XIII tax you failed to deduct.

If you are assessed this penalty more than once in a calendar year, the CRA will apply a 20% penalty to the second or later failures if they were made knowingly or under circumstances of gross negligence.