CRA determined to not grant a waiver of withholding under Reg. 105 from fees to be paid to the appellants in connection with a proposed performance in Canada. The appellants filed Notice of Objection and filed appeals in the Tax Court on the basis that they thereby had been assessed.
After stating (at para. 22) that “if a withholding of tax is not an assessment, a waiver authorizing a Canadian taxpayer to not withhold the 15% on the fees payable to a non-resident is also not an assessment,” Favreau J stated (at paras. 26-7):
The Appellants submitted that CRA made a determination that they were liable to pay tax in Canada and that, this determination was equivalent to an assessment. I do not agree… .[A] waiver is not a determination of the tax liability of a non-resident but it is a decision with regards to giving permission to a Canadian taxpayer or a non-resident payor to not withhold taxes on amounts payable to a non-resident. The tax liability of the non-resident can only be determined by an assessment after a review of his or her tax return.
…[T]he Appellants will always have the opportunity to turn themselves to the Federal Court of Canada in order to force the Minister to change its decision as stated by Justice Bowie in Kravetsky.