AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A Canadian business paying a contractor who works entirely outside Canada generally has no Canadian withholding on the fee, but if the non-resident performs services in Canada, the CRA generally requires 15% to be withheld under Regulation 105. An AI agent can check where the work was done, collect documents, prepare payments and keep the records. A person should confirm the contractor's status and approve each payment.
Canadian small businesses increasingly hire designers, developers and specialists abroad. Paying them is easy to start and easy to get wrong: the question of where the work was done, the currency, the paperwork and the screening all matter. This is general information, not tax advice.
Where was the work done?
The CRA's IC75-6 explains that payers must withhold 15% from fees paid to non-residents for services rendered in Canada, under Regulation 105 of the Income Tax Regulations. Services performed entirely outside Canada are not subject to that withholding. The location of the work, not the location of the client, is the test.
| Situation | Regulation 105 withholding | What to keep |
|---|---|---|
| Developer in Lagos builds an app remotely | Generally none | Contract, invoices, evidence of location |
| UK consultant flies to Toronto for a week of on-site work | Generally 15% on the fee for work in Canada, unless the CRA grants a waiver | Days in Canada, split of fees |
| US designer works remotely, then attends one Vancouver workshop | Applies to the part performed in Canada | Itemised invoice |
Where withholding applies, the payer generally remits it to the CRA and reports the payment on a T4A-NR slip. The non-resident may be able to apply for a waiver in advance, or recover tax by filing in Canada. Treat the details as a question for your accountant.
Employee or contractor?
A person working for you full-time under your direction may not be a contractor at all, wherever they live, and the local law of their country may apply to the relationship. That decision belongs with you and an adviser, not with software.
A checklist an agent can hold
- Contract on file, stating the services, rates, currency and where the work will be done.
- Location record for each invoice, so any work done in Canada is visible.
- Identity and screening. Check the contractor against Canada's sanctions lists before the first payment and when details change; see sanctions screening for Canadian small firms.
- Bank details verified by a second channel before the first payment and any change, because changed details are a common fraud route.
- Currency choice agreed in the contract, so neither side is surprised by conversion costs.
- Rate record. For your Canadian books, record the exchange rate used to convert the payment to Canadian dollars. The CRA's folio on reporting currency discusses acceptable rates, and the Bank of Canada publishes daily rates.
- Approval of each payment above your set limit by a named person.
- Records kept in a form the CRA can read; records generally must be kept for six years.
Common mistakes
- Assuming remote means remote. A contractor who visits for a launch or a training week may have performed part of the service in Canada.
- One invoice for mixed work. If some work was in Canada, an invoice that does not split the fees makes the withholding harder to calculate.
- Changing bank details by email. A request to pay a new account, arriving by email, is the classic invoice fraud. Confirm it by phone using a number you already hold.
- No record of the rate. Converting at whatever the provider offered, with no rate in the books, makes year-end reconciliation slow.
- Paying before the contract. Without a written scope, it is hard to show what was bought and where it was done.
None of these needs judgement to catch. They need consistency, which is what an agent is good at. The judgement comes afterwards, when a person decides what to do about the item the agent raised.
Choosing the currency
Paying a contractor in their own currency, or in US dollars, is common. If your clients pay you in US dollars, paying contractors in dollars can avoid two conversions. The cost of a conversion is not only the fee; the margin built into the exchange rate is often larger. See hidden FX margins for how to check it.
A worked example
Example: a Halifax software company pays a developer in Nigeria US$3,000 a month and a London designer £2,000 a month, both working remotely. The agent confirms each invoice states remote work, checks both names against sanctions lists monthly, verifies a change of the designer's bank details by phone with the owner, and records the Bank of Canada rate for each payment in the books. In March the designer spends three days at a Halifax workshop. The agent flags that invoice, the accountant advises on the Regulation 105 position, and the owner approves the adjusted payment. The agent prepared everything; a person decided the one unusual case.
Where Pryme fits
A Pryme Business account holds USD, GBP, EUR and NGN with local account details, so a Canadian firm earning dollars from clients can pay overseas contractors through bulk payouts without converting through Canadian dollars first. Outside Nigeria this is provided through regulated partners. The Finance agent releases payments only below your limit and the Compliance agent screens counterparties. Pryme does not hold Canadian dollars or file with the CRA for you.
Questions people ask
Do I withhold tax when paying a foreign contractor?
Generally not for work done entirely outside Canada. For services performed in Canada by a non-resident, Regulation 105 generally requires 15% withholding unless the CRA has granted a waiver.
Which exchange rate should I use in my books?
Use a consistent, reasonable rate, such as the Bank of Canada daily rate, and record it. The CRA's folio on reporting currency gives the details.
Should I screen overseas contractors?
Yes. Check them against Canada's sanctions lists before paying, and verify bank details through a second channel.
Can an AI agent pay contractors automatically?
It can release payments below a limit you set, after checks. Larger or unusual payments should wait for a person.
Sources
- IC75-6: Required withholding from amounts paid to non-residents providing services in Canada (Canada Revenue Agency) · accessed Oct 2026
- Income Tax Folio S5-F4-C1, Income tax reporting currency (Canada Revenue Agency) · accessed Oct 2026
- Daily exchange rates (Bank of Canada) · accessed Oct 2026
- Keeping records (Canada Revenue Agency) · accessed Oct 2026
- Current sanctions imposed by Canada (Global Affairs Canada) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.