All payments for services performed in Canada by a non-resident of Canada are subject to income tax withholding at a rate of 15%. It is the obligation of the Canadian payor to withhold and remit this amount pursuant to Regulation 105 under Canada’s Income Tax Act.
The rate of withholding is unaffected by any reduction or exemption available under a tax treaty. While it is possible to apply for a waiver, a new waiver must be obtained with respect to each new contract. Blanket waivers are generally not issued.
The amount withheld is applied against the non-resident’s Canadian income tax liability. If a treaty reduction or exemption is available then a rebate may be obtained by filing a Canadian income tax return after the end of the taxation year.
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