for

A U.S. company (“PepsiCo”) entered into an “exclusive bottling appointment” (“EBA”) with an independent Australian bottling company (“SAPL”). PepsiCo agreed in the EBA to sell, or cause a related entity to sell, beverage concentrate to SAPL for bottling and sale, and granted SAPL the right to use the Pepsi and Mountain Dew trademarks in this regard.

The taxpayer, a Canadian resident, was generally subject to French income tax on the rental income from a French property to the extent of his interest in a French company (a “société civile immobilière”) holding the property, which was treated as fiscally transparent for French income tax purposes.

In 1998 the Canadian taxpayer paid $14.3 million to non-resident service providers in the ordinary course of its forestry business. The Minister assessed it for failure to withhold under Reg. 105 on the following payments: