Regulation 105 Waiver Explained: Form R105
Avoiding the 15 percent withholding on services in Canada, the two waiver types, timing, and recovery
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Regulation 105 requires anyone who pays a non-resident fees for services performed in Canada to withhold 15 percent — 24 percent in total for work in Quebec. A non-resident who owes no Canadian tax, usually under the treaty, can apply on Form R105 at least 30 days before the work so less or nothing is withheld.
On this page
The two waivers
| Type | Basis |
|---|---|
| Treaty-based | The non-resident is exempt under the treaty — typically business profits with no permanent establishment in Canada |
| Income-and-expense | The withholding would exceed the tax on the net income — waiver reduces withholding to the estimated tax |
What the application needs
Form R105 with the contract or details of the services, the dates and days in Canada, the fees, and the treaty position or income and expense estimates; filed at least 30 days before the services start or the first payment. A later application can still be granted, but the waiver covers only payments made after it is issued. Quebec has its own waiver process with Revenu Québec (the Quebec cross-border guide).
Without a waiver
The payer withholds, issues a T4A-NR slip, and the non-resident files a Canadian return (a treaty-based T2 for a corporation, or a non-resident T1) to recover the withholding. The withholding isn't a final tax — it's a prepayment.
Frequently asked questions
What is Regulation 105 withholding?
A 15 percent withholding on fees paid to non-residents for services performed in Canada (plus 9 percent in Quebec).
How do I avoid it?
Apply for a waiver on Form R105 at least 30 days before the services start.
Can I get it back if it was withheld?
Yes, by filing a Canadian return showing the treaty exemption or actual tax.
Does it apply to services performed from the U.S.?
No — only services physically performed in Canada.
Official sources
The Canada Revenue Agency explains: “Pursuant to paragraph 153(1)(g) of the Act and Regulation 105, a withholding of 15% is required from the payment of fees, commissions, or other amounts paid or allocated to a non-resident person in respect of services provided in Canada.” — Canada Revenue Agency, Required Withholding from Amounts Paid to Non-Residents Providing Services in Canada, https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic75-6/required-withholding-amounts-paid-non-residents-providing-services-canada.html
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our Canadian Tax Desk handles R105 waiver applications, Quebec waivers, and Canadian returns recovering Regulation 105 withholding. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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