Status: Closed

Consultation was open from June 30 to August 29, 2025

About the Consultation

The Canada Revenue Agency (CRA) has reviewed the income tax Regulation 105 waiver process. Under Section 105 of the Income Tax Regulations (Regulation 105), every payer must withhold 15% from payments made to non-residents for services rendered in Canada. Payers must withhold this amount for the tax that the non-residents may owe. Withholding tax can be a significant burden, especially if it is more than the actual tax the non-residents owes.

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 giving non-residents applicants a waiver. However, the current waiver application process is complex. The CRA handles applications 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 the non-residents employer certification, many non-residents and businesses still face difficulties with the system.

Budget 2024 proposed a change to the Income Tax Act to give the CRA more discretion in providing relief from Regulation 105; however, this consultation focused on improving the current process.

Consultation process

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

• non-residents affected by Regulation 105 withholding tax
• tax preparers and accountants who help clients comply with Regulation 105
• legal professionals who give 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

The results of the questionnaire are available in the Consultation on the Income Tax Regulation 105 Waiver Process report.

What’s next

Feedback from the questionnaire will help guide improvements to the Regulation 105 waiver process. The CRA is reviewing all input and exploring changes to make the process more efficient and user‑friendly.

Improvements will be introduced gradually, beginning in late spring 2026, as capacity allows. This work is ongoing, and the CRA remains committed to continuous improvement and meaningful engagement.