The appellants, Ontario limited partnerships, mistakenly believed that fees paid to non-resident film studios were deductible and remitted withholding taxes to the Canada Revenue Agency (CRA) on their behalf.
When the CRA later denied the deductions, meaning no withholding tax was actually owed, the appellants sued the CRA in unjust enrichment to recover the remitted funds.
The Court of Appeal affirmed the dismissal of the action, holding that under the Income Tax Act, any overpayment is owed only to the non-residents, not the remitting party.
Furthermore, Part XIII of the Act provides a complete procedural code for the return of withholding taxes, granting exclusive jurisdiction to the Tax Court of Canada.
