Status: Closed

Consultation was open from June 30 to August 29, 2025

About the Consultation

The Canada Revenue Agency (CRA) reviewed the Income Tax Regulation 105 waiver process. Under this regulation, every payer is required to withhold 15% 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. This withholding tax can be a significant burden, especially if it exceeds the actual tax liability.

Section 153(1.1) of the Income Tax Act allows the CRA to reduce or eliminate the withholding tax in cases of undue hardship by issuing a waiver to non-resident applicants. However, the current waiver application process is complex and handled on a case-by-case basis, leading to delays for both non-residents and the CRA.

While the CRA has introduced improvements, such as the Simplified Waiver Application and Non-Resident Employer Certification, many non-residents and businesses still encounter difficulties with the system.

While Budget 2024 proposed an amendment to the Income Tax Act to grant the CRA greater discretion in providing relief from Regulation 105, this consultation focused on improving the current process.

Consultation process

The CRA invited feedback, via an online questionnaire, from anyone affected by or involved with Regulation 105, including:

• Non-residents subject to Regulation 105 withholding tax.
• Tax preparers and accountants who assist clients with Regulation 105 compliance.
• Legal professionals who provide advice on international tax matters related to Regulation 105.
• Canadian businesses that contract non-resident service providers.

The consultation was open from June 30, 2025 to August 29, 2025.

We would like to thank all those who participated for their valuable feedback.

What We Learned

We will include a summary of the consultations related to the Income Tax Regulation 105 Waiver Process, which will be published by winter 2026.