[41] The issue then becomes one of whether the appellants can positively prove that all reasonable care was exercised to ensure that errors not be made (see Pillar Oilfield Projects Ltd. v. The Queen, [1993] G.S.T.C. 49 (T.C.C.)). This Court has said that a taxpayer is expected to comply with the requirements of the Act with a high degree of diligence, using the sources of information, facilities and resources available to that taxpayer. (See Bennett v. The Queen, 96 DTC 1630 and Somnus Enterprises Ltd. v. The Queen, [1995] G.S.T.C. 4.)

[42] In the present case, I agree with counsel for the respondent that the appellants did not produce any evidence as to the steps they took with respect to their withholding obligation. Counsel for the appellants contended that the appellants had obtained advice from their professional advisors and that the appellants were justified in believing that no tax was payable by Marco just on a common sense interpretation of the Licence Agreements.

[43] I wonder why those agreements were not filed in evidence if counsel wanted to rely on them to invoke the due diligence defence. Certainly, without having those agreements in evidence it is very difficult for me to evaluate the correctness of the interpretation put forward by counsel for the appellants.

[44] Furthermore, no evidence was adduced other than the Agreed Statement of Facts. I do not see in that Statement anything to the effect that the appellants consulted professional advisors before making their decision not to withhold any amount on the payments made to Marco. There is no evidence before me regarding what the appellants did once Marco's request for a waiver was denied.

[45] The appellants, as payors, had a duty to ensure that they had fulfilled all their obligations under the Act. I see no evidence showing that the appellants took any action in that regard. The fact that Marco had obtained a waiver in the previous year is not a valid defence, as a non-resident is required to make such a request in advance of the payment to be received. It is the Minister who has the authority, pursuant to subsection 153(1.1) of the Act to reduce the required withholding under section 105 of the Regulations.

[46] It is only upon receipt of a waiver that a payor is released from the obligation of withholding an amount from payments made to a non-resident. Without such a waiver, the payor's obligation must stand. The burden remains on the non-resident to show that no tax is payable in Canada and to request a refund, if any is due.

[47] For all these reasons, I am of the opinion that the appellants did not discharge their burden of showing that they exercised due diligence. The penalties shall therefore be maintained.

[48] The appeals are dismissed, with costs.

Signed at Ottawa, Canada, this 12th day of March 2001.

"Lucie Lamarre"

J.T.C.C.