Regulation 105 to Paragraph 153(1)(g) of the Income Tax
Act (Canada) requires a Canadian customer of a non-resident of
Canada to withhold 15% of the amount invoiced by the nonresident
for the latter's services rendered in Canada.
The Canadian customer must remit such withheld amount to the
Canada Revenue Agency (the "CRA"), for
the non-resident's behalf, by the 15th day of the month
following the month in which the Canadian customer paid the
non-resident for its services. The purpose of Regulation 105 is to
provide the Canadian tax authority with security for tax that may
be owing by the non-resident.
Regulation 105 applies to services including consulting
services, training services, installation services, IT services,
etc. that are physically performed in Canada. Regulation 105
includes service providers such as non-resident individuals,
corporations, trusts and non-Canadian partnership.
