Under the Canadian Income Tax Act (the Act) and its Regulations, non-residents are subject to tax on income earned in Canada in exchange for employment or self-employment services.

The nature of the working relationship is the basic factor that determines both the amounts to be withheld and the provisions of the Income Tax Act and Regulations and tax treaties that apply.

The withholding tax is a payment on account of the non-resident's potential tax liability to Canada, which is determined when an income tax return is filed.