Most Canadian small and mid-sized businesses believe they have no international tax exposure because they do not operate abroad. This obligation runs the other way. It arises from buying services, in Canada, from someone who is not Canadian, and it catches businesses that have never thought of themselves as cross-border at all.
Key Takeaway
Paragraph 153(1)(g) of the Income Tax Act and Regulation 105 require every person paying a non-resident a fee, commission or other amount in respect of services of a non-employment nature rendered in Canada, of any nature whatsoever, to withhold 15 percent, with an additional 9 percent reported where services are rendered in Quebec. Amounts must be remitted by the fifteenth of the following month and reported on a T4A-NR slip. The obligation falls on the payer, including a non-resident payer, and failure to withhold is reported to attract assessment of the amount plus interest and a 10 percent penalty. Our own calculation shows a payer who paid an invoice in full and is later assessed has an outlay of roughly 116.5 percent of contract value outside Quebec, and about 126.4 percent within it. A waiver can reduce or eliminate the withholding, but it must be in place before payment.
A Note On Currency
Everything here is stated as verified in August 2026 and requires confirmation before reliance. One part of this area is in active flux and we flag it specifically.
A professional publication dated June 2026 is titled around the end of Regulation 105 administrative relief and refers to a relief period drawing to a close[1], while an accounting firm bulletin from September 2025 reported CRA extending relief in respect of subcontracting[2]. A CRA consultation on the waiver process ran from June to August 2025[3].
Anyone with a live arrangement in this area must establish the current position rather than relying on this or any other general description, because the position appears to have moved more than once in recent periods.
This is not tax advice. Withholding obligations are strict, the assessment falls on the payer, and a business with an existing or planned engagement should take advice before making a payment rather than after.
The Rule
The obligation, stated as the sources give it.
A professional publication sets out the framework: paragraph 153(1)(g) of the Act and Regulation 105 require every person paying to a non-resident person a fee, commission, or other amount in respect of services of a non-employment nature rendered in Canada, of any nature whatsoever, to deduct or withhold 15 percent of the payment[4].
Another describes the rule as requiring anyone paying a non-resident for services performed in Canada to withhold 15 percent of the gross payment and send it to CRA[5], and CRA guidance is cited for the payer being obligated to withhold 15 percent of the gross payment[6].
Three elements define the scope and each is worth isolating.
The payment must be to a non-resident. The services must be rendered in Canada. And the relationship must be non-employment, since employment remuneration is dealt with under a separate regulation[5].
Note what is absent from that list. There is no threshold amount, no requirement that the non-resident have a permanent establishment in Canada, and no exception for a single short engagement.
The withholding is on the gross payment[7], not on a profit figure, which is the source of most of the difficulty discussed below.
Of Any Nature Whatsoever
Four words in the provision that determine how widely it reaches.
The statutory language, as reported, applies to services rendered in Canada of any nature whatsoever[4].
Commentary illustrates the breadth with examples including consulting, repairs and performances[5].
Consider the range that description covers for an ordinary Canadian business, and this is our own analysis.
A foreign engineer flown in to commission equipment. A trainer delivering a two-day session at your premises. A specialist consultant attending meetings in Toronto. An overseas technician performing a warranty repair. A speaker at your conference. An auditor or inspector visiting a Canadian site. A designer supervising an installation.
None of those parties has a Canadian establishment, none is an employee, and each is providing a service physically in Canada. On the language above, each payment is within the rule.
The phrase is doing deliberate work. A provision drafted to catch services of any nature whatsoever is drafted to remove arguments about categories, which means the analysis turns almost entirely on the three elements identified above rather than on what the service was.
The practical implication is that a business cannot reason from the ordinariness of the transaction. Buying two days of training from a foreign firm feels like buying anything else, and it is not.
Who Is A Payer
The obligated party, which is wider than most businesses assume.
Commentary states that the rule applies to a broad range of payers, such as Canadian residents, businesses, or even other non-residents[5].
CRA material confirms the reporting side of the same point, stating that all payers, resident or non-resident, must report to CRA the payments to non-resident persons for services provided in Canada[7].
That has a consequence worth stating for any business with an international group, and this is our own observation.
A foreign parent or affiliate paying a foreign supplier for services performed in Canada, perhaps at the Canadian subsidiary's site, is within the rule even though no Canadian entity made the payment.
Groups routinely centralise procurement, so a foreign contract negotiated and paid abroad, for work done in Canada, is exactly the arrangement that produces an unnoticed obligation.
The other consequence concerns Canadian businesses acting as intermediaries. A Canadian company that engages a foreign supplier and recharges the cost to a client is the payer, regardless of who ultimately bears the expense.
The test is who paid the non-resident, not who benefited or who funded it.
What Is Caught And What Is Not
The boundaries, from the commentary.
The rule covers payments like fees or commissions for services such as consulting, repairs or performances. It does not extend to payments for goods, to employee salaries which are covered under Regulation 102, or to reimbursements for specific expenses like travel, if properly documented[5].
Three observations follow, all ours.
The goods exclusion creates a classification question wherever a contract covers both. A supply of equipment with installation is a payment for goods and a payment for services rendered in Canada, and the split matters.
The employment carve-out is not relief; it is a redirection. Payments to a non-resident employee fall under a different regulation with its own obligations, and a business concluding that Regulation 105 does not apply has not concluded that nothing applies.
And the reimbursement exclusion is conditional on documentation, which is the subject of its own section below.
The classification question deserves emphasis because it is where most ordinary arrangements sit. A single invoice for a machine, its shipping, its installation and a week of on-site training contains at least two categories, and an undifferentiated invoice invites the treatment described in the allocation section.
Advance Payments
A timing point that catches businesses paying deposits.
One source states that CRA administrative guidance treats advance payments made in respect of services to be performed in Canada as being within the scope of the withholding rule[8].
We report that as the source characterises the guidance, and it should be confirmed.
If correct, it removes an intuitive escape and this is our own analysis of why it matters.
A business might reasonably think that withholding attaches when services have been rendered, so a deposit paid before anyone travels to Canada is outside the rule. On this characterisation it is not: the question is whether the payment is in respect of services to be performed in Canada.
That is significant because deposits are common in exactly the engagements this rule catches. Equipment commissioning, event performances, and specialist consulting frequently require payment in advance.
It also creates a practical difficulty. At the point of a deposit the allocation between Canadian and non-Canadian services may be unknown, and the reimbursement position may be unsettled.
The response is to resolve those questions in the contract before the deposit rather than at final invoice, which is the theme of a later section.
The Quebec Addition
A provincial layer that changes the arithmetic substantially.
A professional publication states that an additional 9 percent withholding tax applies where the services are rendered in the province of Quebec, and that amounts withheld must be remitted to the Receiver General or to Revenu Québec by the fifteenth of the month following the month in which payment is made[4].
We report the additional rate as that source states it and recommend confirming both the rate and the remittance mechanics with a Quebec adviser, since provincial administration differs.
The combined effect is 24 percent of gross, which is our own arithmetic, and it is a materially different commercial proposition from 15 percent.
Two practical points, ours.
The trigger is where the services are rendered, not where the payer or supplier is located. A business anywhere in Canada engaging a foreign supplier to perform work at a Quebec site is in the higher-rate position.
And for engagements spanning provinces, the location of performance has to be tracked, not assumed. A foreign consultant working two days in Montreal and three in Toronto presents an allocation question of exactly the kind that the documentation rules punish when unanswered.
The Remittance Deadline
The mechanics, which are unforgiving.
CRA material states that the remitting requirements are set out in Regulation 108, which requires that withholding taxes be remitted by the fifteenth of the month following the month in which the amounts were deducted or withheld[7]. Commentary confirms the same deadline[6][4].
Note the structure of that deadline and this is our own emphasis.
The clock runs from the month of payment, not from the month of invoice, the month the services were performed, or the end of a reporting period.
So the obligation is triggered by an accounts payable event, and it must be recognised at that moment. A business that identifies the issue during a quarterly review or at year end has already missed the deadline for every payment in the intervening period.
That places the control in an unusual place. This is not a tax question resolved by an advisor at year end; it is a payment processing question that has to be answered before the transfer goes out.
The businesses that get this wrong are rarely those that considered the question and answered it badly. They are those in which the payment was processed by someone who had no reason to know the question existed.
The Slip
The reporting obligation, which is separate from the withholding.
CRA material states that payments to non-resident persons for services provided in Canada are to be reported on a T4A-NR slip[7]. Commentary states the slip is due by the end of February in the year following the year in which the amounts were paid[6], and another that gross amounts paid by each Canadian customer should be shown on such a slip issued by 28 February of the following year[9].
Two points, both ours.
The reporting obligation applies to all payers, resident or non-resident[7], and it is expressed in terms of payments made, not amounts withheld. A payer who correctly obtained a waiver and withheld nothing still has a payment to report.
And the slip is the mechanism by which the supplier recovers over-withholding. A non-resident who cannot obtain the slip cannot readily substantiate the credit on a Canadian return, which makes issuing it a commercial obligation to the supplier as well as a compliance one.
Late filing is reported to trigger penalties[6], and this publication has addressed information return penalties in the context of construction subcontractor slips, where the applicable provision was not straightforward. The same caution applies: establish which penalty provision governs before relying on a figure.
The Payer's Exposure
Where the liability lands, which is the whole point of this article.
Commentary is direct: the responsibility for unremitted Regulation 105 tax falls primarily on the payer, being the person or entity making the payment to a non-resident for services performed in Canada. If the payer fails to withhold or remit, the payer becomes liable for the unremitted tax, plus any applicable interest and penalties[6].
CRA material states that failure to deduct or remit an amount under Regulation 105 may result in an assessment of the outstanding amount, plus interest and penalty, pursuant to section 227 of the Act[7].
A professional publication states that there is a 10 percent penalty for non-compliance[4]. We report that figure as stated and recommend confirming it and its statutory basis.
The structural feature to understand, and this is our own analysis, is that the payer is being made liable for the potential tax of a different taxpayer.
The withholding exists because the non-resident may owe Canadian tax and may be difficult to pursue. The mechanism solves that by attaching the collection obligation to the party CRA can reach.
So the payer is not being penalised for its own tax position. It is being assessed as a collection agent that did not collect, and the fact that the non-resident may owe nothing at all does not automatically discharge it.
One Hundred And Sixteen Percent
The arithmetic of getting it wrong. These calculations are our own, applying the reported rates to a hypothetical contract.
Take a hundred thousand dollar engagement with a foreign supplier for services rendered in Canada, outside Quebec.
Done correctly, the payer withholds fifteen thousand and remits it, and the supplier receives eighty-five thousand.
Done incorrectly, the payer pays the full hundred thousand. On a later assessment it owes CRA the fifteen thousand it should have withheld, plus a ten percent penalty of fifteen hundred, plus interest.
Total outlay: $116,500 on a $100,000 contract, being roughly 116.5 percent of contract value before interest.
In Quebec, at the combined twenty-four percent, the same failure produces an outlay of approximately $126,400, or about 126.4 percent.
The crucial assumption in those figures is that nothing is recovered from the supplier, and this is our own analysis of why that assumption is usually right.
The supplier is a non-resident. The engagement is finished. They have been paid in full and have left. There is no Canadian asset to pursue, the amounts are frequently too small to justify foreign litigation, and the contract may say nothing about it.
In principle the payer has a claim against the supplier for the amount it should have deducted. In practice, whether that claim is worth anything depends entirely on the contract, which is the subject of a section below.
The asymmetry to hold onto is that withholding costs the payer nothing and failing to withhold costs it everything.
It Is Not The Supplier's Final Tax
An important point that reframes the whole mechanism.
Commentary states that the withheld amount is not the non-resident's final tax bill but acts as a prepayment toward their potential Canadian tax liability[5]. Another describes CRA as treating the withholding as a payment on account of the non-resident's potential Canadian income tax liability rather than a final tax[8].
A third puts the same point from the supplier's perspective: the withholdings are recorded as a tax instalment on the Canadian return, and the withholding of 15 percent is not necessarily the final amount of Canadian tax owed but is considered an advance payment[9].
Two consequences follow, and they run in opposite directions.
For the payer, this is why the obligation is strict but the amount is not calibrated to anything. Fifteen percent of gross is a collection device, not an estimate of the supplier's liability, so a payer cannot reason that the supplier owes nothing and therefore nothing need be withheld.
For the supplier, it means the withholding is frequently an overpayment. Fifteen percent of gross revenue will exceed the tax on the profit of that engagement in most ordinary commercial cases, because gross revenue is not profit.
That produces the friction described in the next section, and it is the reason waivers exist.
What The Supplier Has To Do
The recovery mechanism, which is more onerous than foreign suppliers expect.
Commentary states that to calculate their tax liability or to obtain a refund, service providers must submit either a Canadian personal or corporate income tax return[1]. Another notes that where a non-resident carries on business in Canada they must file a Canadian corporate return, and can claim a refund of the withholdings on that return[9].
Filing deadlines are given as June 15 of the following calendar year for individuals, and six months after the corporate year end for corporations[9].
Consider what that requires of a foreign supplier who did two days of work in Canada, and this is our own analysis.
They must register with CRA, prepare and file a Canadian return, compute Canadian source income and allowable expenses, and wait for a refund, all to recover an amount that may be a few thousand dollars.
Many will not bother, in which case the withholding becomes a real cost of doing business in Canada rather than a prepayment.
Three commercial consequences for a Canadian payer follow, and they explain why this is a procurement issue rather than only a tax one. Foreign suppliers who understand the rule will price for it. Those who do not will be unpleasantly surprised at payment, which damages the relationship. And some will refuse to contract at all, or will insist on being grossed up, which transfers the cost to the Canadian party.
Waivers
The relief mechanism and its two bases.
CRA describes the statutory authority: subsection 153(1.1) of the Act allows the Agency to reduce or eliminate the withholding tax in cases of undue hardship by issuing a waiver to non-resident applicants[3].
Commentary describes a waiver as a written authorization from CRA permitting a payer to reduce the withholding rate or not withhold at all for specific payments, granted where the non-resident can show that the standard gross-based withholding is more than their expected Canadian tax liability. It identifies two common bases: treaty-based relief, where the non-resident can demonstrate the income is not taxable in Canada under an applicable treaty, and an income and expense approach, where the non-resident expects Canadian taxable income but 15 percent of gross would exceed the expected final tax once reasonable expenses are considered[8].
One publication describes the income and expense waiver as applying where the resident lives in a country not involved in a tax treaty with Canada[1]. We report that characterisation as that source states it, note it is narrower than the description in the other source, and would not rely on either without advice on the specific facts.
Two practical observations, ours.
The waiver is applied for by the non-resident, but it protects the payer. That split of interest and effort is a recurring source of failure: the party that must act is not the party that bears the risk.
And a waiver is specific. It authorises a reduction for particular payments, so a waiver obtained for one engagement does not cover the next.
The Waiver Must Exist Before Payment
The single most important procedural point in this article.
Commentary states it plainly: absent a waiver in place before payment, the payor must withhold the 15 percent as required[1].
CRA material puts the same point from the other direction: if the payer has not obtained written notification from CRA, the required withholding tax is mandatory[7].
Read those together and the position is that the payer's default is to withhold, and the only thing that changes it is a document in hand.
Three consequences, all ours, and each is a way businesses get this wrong.
A waiver application that has been submitted is not a waiver. Payment made while an application is pending attracts the full obligation.
A supplier's assurance that they are covered by a treaty is not a waiver. Treaty entitlement may be real and the withholding obligation still applies until CRA has said otherwise in writing.
And processing takes time. CRA's own consultation material acknowledges that the waiver application process is complex, handled case by case, and leads to delays for both non-residents and the Agency[3].
So the waiver has to be started when the engagement is contemplated, not when the invoice arrives. A business that identifies the issue at payment has already lost the option.
The Allocation Trap
The documentation rule with the harshest default, and the one most likely to affect an ordinary engagement.
Commentary states that where services are performed partly inside and partly outside Canada, only the portion reasonably allocable to services rendered within Canada is subject to the Regulation. It then adds the critical qualification: if the allocation is not properly documented, CRA recommends withholding the entire amount[1].
That default is the opposite of what a payer would assume, and this is our own analysis of its effect.
Most engagements with foreign suppliers are mixed. A consultant spends three days in Canada and three weeks working from their own office. An engineer commissions equipment on site after months of remote design. A firm delivers a report following a single Canadian site visit.
In each case the Canadian portion may be a small fraction of the fee, and only that fraction is within the rule.
But absent documentation of the split, the guidance points to withholding on the whole invoice, which converts a modest obligation into a substantial one.
The remedy is entirely within the parties' control and costs nothing: require the supplier to state the Canadian and non-Canadian components on the invoice, supported by a record of days or hours by location.
That has to be agreed in the contract, because a supplier presented with the request at invoicing has no incentive to cooperate and every incentive to send an undifferentiated bill.
The Reimbursement Carve-Out
A relief that is real and conditional.
Commentary states that reimbursements of travel to a reasonable degree, accommodation and meal expenses are generally treated differently from service fees, and that as long as the payor agreed to reimburse such costs, they are generally not subject to the Regulation[1]. Another lists reimbursements for specific expenses like travel as outside the rule, if properly documented[5].
Three conditions appear across those descriptions and each matters, which is our own reading.
The amounts must be genuine reimbursements rather than an allowance or an uplift built into the fee. A supplier charging a flat daily rate that notionally includes travel is charging a fee.
The payor must have agreed to reimburse them, which points to the contract rather than to a later accommodation.
And they must be documented, meaning the underlying receipts, not merely a line on an invoice describing an amount as expenses.
The reasonableness qualifier attached to travel[1] is a further limit, and we have not established how it is applied.
For a Canadian payer the practical structure is to contract for fees and reimbursable expenses separately, require receipts for the latter, and have them invoiced as a distinct line. That converts an argument into an arithmetic exercise.
An Area In Flux
A development that readers must verify for themselves, reported here because ignoring it would be worse.
An accounting firm bulletin dated September 2025 was headed around CRA extending relief for Regulation 105 in respect of subcontracting. It records that taxpayers paying fees, commissions or other amounts to non-residents for services rendered in Canada are generally subject to the 15 percent obligation, that the rule is intended to ensure CRA collects income taxes that may be owed by non-residents, and that a waiver rule allowing CRA to waive the withholding requirement in certain circumstances was originally announced in the 2024 federal budget. It refers to assistance with refund requests for withholding tax payments made on or after 1 October 2024 and before the administrative relief extension was announced, and suggests considering whether service agreements should be revised[2].
A professional publication dated June 2026 is framed around the end of Regulation 105 administrative relief and refers to the relief period drawing to a close[1].
We have not established the current position and we are not going to guess at it. What a reader should take from this is narrower and still important, and this is our own view.
There is a live issue concerning payments to non-residents in subcontracting chains, where the same underlying services can attract withholding more than once as amounts pass between parties. That is the problem administrative relief addressed.
A business in a chain of this kind, whether as principal, intermediary or subcontractor, should establish the position as it stands now. The dates matter, the relief appears to have had a defined window, and a suggestion that service agreements may need revising is a suggestion that the commercial documents were drafted for a different regime.
The Process Itself Is Under Review
Context that explains why this area has been unstable.
CRA ran a consultation on the Regulation 105 waiver process, open from 30 June to 29 August 2025. Its description of the problem is unusually frank: every payer is required to withhold 15 percent from payments made to non-residents for services provided in Canada, the payers are required to withhold for the potential tax owing by non-residents, and this withholding tax can be a significant burden, especially if it exceeds the actual tax liability. It notes that the current waiver application process is complex and handled on a case-by-case basis, leading to delays for both non-residents and CRA[3].
Two observations, ours.
An administrator publicly describing its own relief process as complex and slow is a meaningful signal. It suggests that businesses relying on obtaining a timely waiver have been experiencing exactly what the description implies.
And a consultation that closed in August 2025 may have produced changes since. A business planning an engagement should check whether the waiver process has been reformed before building a timeline around the historic one.
The consultation's framing also confirms the structural point made throughout this article. The Agency itself describes payers as required to withhold for the potential tax owing by non-residents, which is an accurate statement of a mechanism that makes one party responsible for another's contingent liability.
Where This Belongs: The Contract
The practical conclusion, offered as our own analysis.
Every difficulty described in this article is capable of being resolved in the engagement agreement, and almost none of it can be resolved after payment.
Six provisions do the work.
An acknowledgment of the withholding, so the supplier cannot treat the deduction as a breach or a short payment.
A statement of who bears it. Absent this, a supplier will frequently demand a gross-up, and whether the Canadian party has agreed to that should be a decision rather than a default.
An allocation obligation, requiring the supplier to identify Canadian and non-Canadian components with supporting records, which addresses the trap described above.
Separate treatment of reimbursable expenses, invoiced distinctly and supported by receipts.
A waiver undertaking, requiring the supplier to apply in good time and to provide the written authorization before payment if reduced withholding is expected.
An indemnity, so that if the payer is later assessed, it has a contractual claim, ideally supported by a right of set-off against amounts still payable.
That last point is worth stressing. A right of set-off is worth considerably more than an indemnity alone, because it can be exercised while the payer still holds money, which is the only moment at which a non-resident supplier is reliably reachable.
What The Auditor Actually Examines
The enquiry in practice. This section is our own analysis, structured by the rule's elements.
The vendor master file for foreign addresses. The first and cheapest screen, since a non-resident payee is the threshold condition and the accounts payable system already records it.
Payments to those vendors, tested for services rendered in Canada. Purchase orders, contracts and expense claims showing travel to Canada are the evidence.
Invoices for undifferentiated fees where services were partly performed abroad, against the allocation documentation.
Mixed goods and services contracts, where the services element may not have been separated.
Amounts described as expenses or disbursements, tested against whether they are genuine documented reimbursements.
Waivers held, and specifically whether each was in place before the relevant payment.
Remittance timing against the fifteenth of the following month, and slips filed.
Intercompany arrangements, where a foreign affiliate paid for services performed in Canada.
The first item is why this exposure is discoverable at low cost. A list of foreign vendors is a query, and it produces the population from which everything else follows.
What Records Survive
A standing list of non-resident suppliers, maintained in accounts payable, flagged so that payments cannot be processed without the question being asked.
Contracts containing the six provisions above, retained with the payment records.
Allocation records by location, being days or hours in Canada against elsewhere, provided by the supplier and retained.
Receipts supporting reimbursed expenses, not merely invoice line items.
Waivers, with evidence of the date received, since the timing relative to payment is determinative.
Remittance confirmations by month, and copies of slips filed.
A note of the treatment decision for each engagement, recording why withholding was or was not applied. This is the document that converts an audit into a conversation.
What To Do
Run the foreign vendor query today. It is a single report and it produces the population you need to assess.
Put the question into accounts payable, not into year-end. The deadline runs from the month of payment, so a control applied at review has already failed.
Assume the rule applies to services of any nature. Training, commissioning, repairs, inspections, performances and consulting are all within the reported language.
Never treat a pending waiver application as a waiver. The obligation is mandatory absent written notification from CRA, and processing is described by CRA itself as complex and slow.
Document the Canada and non-Canada split, in the contract. Undocumented allocation points to withholding on the entire amount.
Contract for fees and reimbursable expenses separately. The carve-out depends on the payor having agreed to reimburse and on documentation.
Check whether services touch Quebec. An additional 9 percent is reported, taking the combined rate to 24 percent.
File the slip even where a waiver applied. The reporting obligation is expressed in terms of payments made, not amounts withheld.
Take an indemnity with a right of set-off. It is the only remedy that works while you still hold the money.
Establish the current position on subcontracting relief. Sources indicate it was extended and is now reported to be closing, and that service agreements may need revising.
The Limits Of This Analysis
Several caveats matter, and one is unusually significant. This is not tax advice; withholding obligations are strict and the assessment falls on the payer, so advice should be taken before payment. Everything is stated as verified in August 2026 and requires confirmation, and one part of this area is in active flux: a September 2025 bulletin reports CRA extending administrative relief in respect of subcontracting, a June 2026 publication is framed around that relief ending, and a CRA consultation on the waiver process closed in August 2025. We have not established the current position on any of these and readers must. Statutory provisions are described from professional commentary and CRA guidance pages rather than from the legislation, which we did not verify. The additional Quebec rate, the 10 percent penalty figure and the treatment of advance payments are each reported from a single source and should be confirmed. Two sources describe the income and expense waiver basis differently, one materially narrower than the other, and we have not resolved the difference. We have not established how the reasonableness qualifier on travel reimbursements is applied. The interaction with Regulation 102 for non-resident employees, and with non-resident employer certification, is noted only in passing and is a substantial subject we have not addressed. All arithmetic, including the 116.5 and 126.4 percent figures, is our own, applies reported rates to a hypothetical contract, excludes interest, and assumes no recovery from the supplier. The contract provisions, the allocation analysis, the procurement observations, the audit examination structure and the records list are our own. This article does not address GST/HST on imported services, permanent establishment questions, treaty analysis, or provincial requirements beyond the reported Quebec rate.
Frequently Asked Questions
We hired a foreign consultant for two days in Toronto. Does this apply?
What happens if we pay the invoice in full?
The supplier says a treaty exempts them. Can we skip the withholding?
Most of the work was done abroad. Do we withhold on everything?
Is the 15 percent the supplier's final Canadian tax?
What single control prevents this?
References
- MLT Aikins LLP. (2026, June 26). The End of Regulation 105 Administrative Relief: Required Withholding From Amounts Paid to Non-Residents Providing Services in Canada, on service providers submitting a Canadian personal or corporate return to calculate liability or obtain a refund; on the requirement that absent a waiver in place before payment the payor must withhold; on services performed partly inside and partly outside Canada with only the portion reasonably allocable to Canada subject to the Regulation, and CRA recommending withholding the entire amount where allocation is not properly documented; on reimbursements of travel to a reasonable degree, accommodation and meals generally not being subject where the payor agreed to reimburse; on waivers as statutory mechanisms to avoid or reduce the withholding; on the income and expense waiver as described in that source; and on the relief period drawing to a close. Note: a Canadian law firm publication; its description of the income and expense waiver is narrower than another source's and we have not resolved the difference. mltaikins.com
- KPMG Canada. (2025, September 3). CRA Extends Relief for Regulation 105 Subcontracting, TaxNewsFlash, on taxpayers paying fees, commissions or other amounts to non-residents for services rendered in Canada being generally subject to the 15 percent obligation; on the rule being intended to ensure CRA collects income taxes that may be owed by non-residents; on a waiver rule allowing CRA to waive the withholding requirement in certain circumstances originally announced in the 2024 federal budget; on refund requests for withholding tax payments made on or after 1 October 2024 and before the administrative relief extension was announced; and on considering whether service agreements should be revised. Note: an accounting firm bulletin describing a position that other sources indicate has since changed. kpmg.com — TaxNewsFlash
- Canada Revenue Agency. Share Your Thoughts: Income Tax Regulation 105 Waiver Process, consultation open from 30 June to 29 August 2025, on every payer being required to withhold 15 percent from payments made to non-residents for services provided in Canada; on payers being required to withhold for the potential tax owing by non-residents; on the withholding being a significant burden especially where it exceeds actual tax liability; on subsection 153(1.1) allowing CRA to reduce or eliminate the withholding in cases of undue hardship by issuing a waiver to non-resident applicants; and on the current waiver application process being complex and handled case by case, leading to delays. Note: a CRA primary publication; the consultation has closed and may have produced changes. canada.ca — Reg 105 waiver consultation
- PwC Canada. Tax Insights: Recent Developments for Regulation 105 Withholding, on paragraph 153(1)(g) of the Act and Regulation 105 requiring every person paying a non-resident a fee, commission or other amount in respect of services of a non-employment nature rendered in Canada, of any nature whatsoever, to deduct or withhold 15 percent; on an additional 9 percent withholding applying where services are rendered in Quebec; on remittance to the Receiver General or Revenu Québec by the fifteenth of the month following payment; and on a 10 percent penalty for non-compliance. Note: an accounting firm publication; the Quebec rate and penalty figure should be confirmed. pwc.com
- Rotfleisch & Samulovitch PC. What Is CRA's Regulation 105?, on the rule requiring anyone paying a non-resident for services performed in Canada to withhold 15 percent of the gross payment; on its application to a broad range of payers including Canadian residents, businesses or even other non-residents; on coverage of fees and commissions for services such as consulting, repairs or performances; on exclusion of payments for goods, employee salaries covered under Regulation 102, and reimbursements for specific expenses like travel if properly documented; and on the withheld amount being a prepayment toward potential Canadian tax liability rather than a final bill. Note: a Canadian tax law firm publication. taxpage.com
- Rotfleisch & Samulovitch PC, as syndicated, Canadian Tax Lawyer Explains Withholding Tax for Non-Residents, citing CRA guidelines including Information Circular IC75-6R2 for the payer being obligated to withhold 15 percent of the gross payment and remit by the fifteenth of the month following payment; on responsibility for unremitted tax falling primarily on the payer; on the payer becoming liable for the unremitted tax plus applicable interest and penalties where it fails to withhold or remit; on reporting using the T4A-NR slip due by the end of February in the year following payment; and on late filings or payments triggering penalties. Note: a Canadian tax law firm publication; we did not access the information circular directly. mondaq.com
- Canada Revenue Agency. Tax Treatment of Non-Residents Who Perform Services in Canada, on remitting requirements being outlined under Regulation 108, requiring remittance by the fifteenth of the month following the month in which amounts were deducted or withheld; on the only alternative being for the non-resident to obtain a waiver or reduction; on the withholding being mandatory where the payer has not obtained written notification from CRA; on failure to deduct or remit potentially resulting in assessment of the outstanding amount plus interest and penalty pursuant to section 227 of the Act; and on all payers, resident or non-resident, being required to report payments to non-resident persons for services provided in Canada on a T4A-NR slip. Note: a CRA primary publication. canada.ca — non-residents performing services
- Maroof HS CPA Professional Corporation. (2026, February 12). Regulation 105 Withholding and Waivers, on the rule requiring the payer to withhold 15 percent of the gross amount paid for services rendered in Canada; on CRA treating the withholding as a payment on account of potential Canadian income tax liability rather than a final tax, recoverable through the Canadian filing process; on the rule applying broadly to fees, commissions and other amounts; on CRA administrative guidance treating advance payments in respect of services to be performed in Canada as within scope; and on a waiver being a written authorization permitting reduced or nil withholding for specific payments, with treaty-based and income and expense bases described. Note: a professional accounting publication; the treatment of advance payments is reported from this source alone. maroofhs.com
- UHY Victor. Regulation 105: Top Questions Asked by Non-Residents Providing Services in Canada, on requesting that CRA waive or reduce the 15 percent rate where the amount exceeds potential liability due to a treaty or Canadian source taxable income; on income and expense waivers being based on demonstrating that the withholdings are excessive; on the need to file a Canadian return to calculate final tax and obtain a refund of excess withholding; on gross amounts being shown on a T4A-NR slip issued by 28 February of the following year; on filing deadlines of June 15 of the following calendar year for individuals and six months after year end for corporations; and on the withholdings being recorded as a tax instalment on the return. Note: a professional accounting publication. uhyvictor.com
This article is provided for general informational purposes and is not tax advice. Part of this area is in active flux: sources report administrative relief in respect of subcontracting being extended in 2025 and closing in 2026, and a CRA consultation on the waiver process closed in August 2025. The current position has not been established here and must be confirmed. Statutory provisions are described from commentary and CRA guidance rather than verified against the legislation. All arithmetic is the authors' own, applies reported rates to a hypothetical contract, and excludes interest.