HOME > WITHHOLDING TAX EXEMPTION FOR NON-RESIDENT EMPLOYERS
IS YOUR COMPANY ACTIVE IN CANADA AND DO YOU WANT TO CONTROL YOUR COSTS? WE SUPPORT YOU IN REMAINING COMPLIANT WHILE MANAGING YOUR OPERATIONS.
In Canada, the withholding tax applicable to non-residents is the obligation imposed on Canadian payers to withhold and remit tax on certain categories of income paid to individuals or entities that are non-residents of Canada.
This withholding is intended to ensure that non-residents fulfil their tax obligations towards the Canadian authorities.
Consequently, the secondment of non-resident personnel to provide services physically in Canada may give rise to a withholding tax obligation.
A non-resident corporation of Canada is required to withhold and remit tax on employment income paid to non-resident employees working in Canada.
Under Canadian income tax legislation, Canadian payers – including employers and non-resident corporations that second non-Canadian personnel – must withhold a portion of certain types of income at source before any payment to a non-resident. The amount withheld is then remitted to the Canada Revenue Agency (CRA).
If so, you may be required to withhold and remit tax on certain categories of income paid to non-residents of Canada.
The types of income* that may be subject to non-resident withholding tax include the following:
When a non-resident carries on an activity in Canada, the employer must withhold tax on that person’s salary (including for short-term assignments).
Canadian corporations that pay dividends to non-resident shareholders must withhold tax on these payments.
Canadian payers that pay royalties to non-residents are required to withhold tax on these amounts.
*Other categories of income may also be subject to withholding tax; the list above is not exhaustive.
ASD Group provides you with all the necessary expertise and skills:
ASD Group specialists will review and document how your employee and your organisation meet the criteria for eligible non-resident employee and employer at the time any employment income is paid.
After discussion with our team, and subject to the applicable conditions being met, we will prepare, file and submit a tax exemption or certification application on your behalf.
When further explanations or discussions are required, ASD Group will act as an intermediary between your organisation and the competent tax authorities, providing the required information and responding to requests. This active role facilitates the progress of the application and ensures that any questions raised by the authorities are addressed without delay.
ASD Group specialists will work with you to review your situation: verifying eligibility criteria, compiling the application file and associated tasks.
We will communicate with the Canada Revenue Agency (CRA) to obtain all the necessary information.
We carry out the required formalities on your behalf so that you remain fully compliant.
ASD Group specialists will file your returns and remain by your side until the refund of GST/HST/QST amounts on eligible transactions.
The tax landscape continues to evolve. Companies increasingly recognise that a solid tax approach is essential for sustainable profitability. Managing withholding tax exemptions for non-resident employers in Canada requires specialised expertise. Choosing ASD Group therefore means:
A dedicated Canadian team available on a daily basis to support you and secure your operations.
A trusted partner for more than 20 years that acts as your preferred contact with the Canadian tax authorities.
A network of 25 offices across 21 countries in Europe and beyond.
We provide advanced software solutions that facilitate the administration and processing of Canadian taxes.
For more than ten years, our qualified specialists have been dedicated to simplifying your formalities and obligations in Canada and the United States.
ASD Group acts as your single point of contact for tax compliance and your gateway to expanding your operations in North America.
ASD Group offers ready-to-use strategic solutions for efficient cash flow and asset transaction management.
Withholding rates vary according to the category of income and the country of residence of the recipient. Tax treaties concluded between Canada and other countries may also influence these rates. In most cases, the tax withheld constitutes a payment on account of the final tax due by the non-resident in Canada.
As a general rule, employers are liable to a penalty if, during a calendar year, they fail to withhold an amount from employment income paid to a non-resident employee for services rendered in Canada.
Withholding tax for non-resident employers in Canada is the mechanism by which Canadian employers must withhold a portion of the income paid to non-resident employees so that the appropriate federal and provincial taxes reach the Canadian government.
A non-resident employer in Canada is generally an organisation or individual without a permanent establishment in Canada that employs workers there. The precise rules depend on the facts of each case, but the absence of a permanent branch in Canada generally leads to non-resident employer status.
Withholding tax applies to payments such as salaries, fees, commissions, allowances, pensions and other forms of remuneration paid to non-resident employees working in Canada.
Non-resident employers calculate the tax to be withheld using the rates applicable in the province where the services are rendered. The tax must be deducted from each payment made to non-resident employees and remitted to the Canadian government. Employers are also required to file returns reporting these payments.
The rates depend on the income level of the non-resident employee and the province in which the services are rendered. It is recommended to check the rates currently in force, as they may be updated each year.
Non-resident employers must register with the Canada Revenue Agency (CRA). They must also correctly withhold income tax on payments made to non-resident employees, file the necessary returns and remit the amounts withheld to the CRA.
Yes. Certain exemptions or exceptions may apply depending on the nature of the work, the status of the employee and any tax treaty between Canada and the employee’s country of residence. It is recommended to consult the CRA or a tax specialist to confirm whether an exemption is available.
Failure to comply with Canadian tax rules may result in penalties and interest. Non-resident employers must therefore comply with Canadian tax legislation in order to avoid these consequences.
The information on this page is provided for general information purposes only and does not constitute legal, financial or tax advice. For support tailored to your business, please contact ASD Group.
From 1 September 2026 · Foreign large and mid-sized companies, get ready! More info
