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Appeal dismissed; appellant liable for failure to withhold Part XIII tax on equipment rental payments.
The appellant appealed reassessments for its 2014 and 2015 taxation years regarding its failure to withhold and remit Part XIII tax on rental payments made to a UK resident company for subsea mooring chains.
The Tax Court of Canada found that the UK company was the beneficial owner of the rental payments and was not acting as an agent for its Norwegian affiliate.
Consequently, the payments were subject to a 10% withholding tax under the Canada-UK Tax Convention.
The Court also upheld the penalties imposed under subsection 227(8) of the Income Tax Act, finding that the appellant failed to establish a due diligence defence.
The appeal was dismissed with costs.
