He said he believes pressure needs to come from the U.S. to get the Canadian government to respond.
“This has to be fixed at a very high level,” Fontaine said. “Right now, companies are effectively forced to deal with the bureaucrats to get treaty benefits to effectively apply. It slows everything to a crawl.”
Sinclair said her “best guess” as to why the CRA seems to have changed its waiver approval process is that it is considering a new test to determine whether employees are exempt under the treaty.
The CRA’s Brideau told Bloomberg BNA on Nov. 27 that the agency “is not currently working on developing such a test.”
Ronald Nobrega, a partner in the Toronto office of business law firm Fasken Martineau DuMoulin LLP, said dealing with the CRA can be a guessing game.
“You never know quite what they’re going to ask,” he said. “The guidelines are out of date. Compliance can be burdensome and costly.”
Laher said Canada’s reputation as a valued location for business meetings and executive conferences may be changing because of the snarls surrounding the withholding rules.
“Canada’s not becoming the location of choice,” Laher said. “As a proud Canadian, I don’t like that.”