The Canada Revenue Agency (CRA) released an updated guide – T4A-NR – Payments to Non-Residents for Services Provided in Canada – for those who make payments to non-resident individuals, partnerships, or corporations for services rendered in Canada, other than in employment situations.

These payments typically incur a 15% withholding tax.

The guide covers the requirements for payers to withhold and remit tax and to file the T4A-NR information return, as well as the related penalties, interest, and other consequences for failing to comply.

A 3% penalty applies if the amount is received on or before the due date but not paid in the required manner, or if it is one to three days late. A 5% penalty applies if the payment is four or five days late, increasing to 7% if it is six or seven days late. If the payment is more than seven days late or no amount is remitted, a 10% penalty is imposed.

The guide also covers the procedures for non-residents to apply for a waiver or a reduction of withholding.

The Canada Revenue Agency (CRA) may waive or reduce withholding for non-residents if they can demonstrate that their withholding amount is higher than their potential Canadian tax liability, which could be due to treaty protection or income and expenses. The CRA administers legislation, commonly called the taxpayer relief provisions, that gives the CRA the discretion to cancel or waive penalties and interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control.

The CRA’s discretion to grant relief is limited to any period that ended within 10 calendar years before the year in which a relief request is made.

For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2024 must relate to a penalty for a tax year or fiscal period ending in 2014 or later.