The non-resident parent of the taxpayer ("FMCI") entered into a subcontract with the taxpayer for the performance of the in-Canada portion of its performance obligations of FMCI under a contract with a Canadian company ("Petro-Canada") and also assigned the portion of the contractual payments due to FMCI (representing the value of the in-Canada portion of the work provided by the taxpayer) to the taxpayer. These arrangements did not detract from the earning by FMCI of all the fees, so that Regulation 105 withholding was applicable to the full amount of the fees earned by FMCI under the contract including the portion it had assigned to the taxpayer.
Even if no Regulation 105 withholding had been applicable, the taxpayer would have had no right to recover the amounts from CRA. Instead it would have been open to FMCI to seek a return of the amounts withheld by Petro-Canada by filing Canadian income tax returns reflecting the monies received from Petro-Canada and deducting the amounts paid to the taxpayer.