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The standard withholding tax rate on money a Canadian sends to a non-resident is 25%. That’s the Part XIII rate under the Income Tax Act, and it applies to things like interest, dividends, rent, royalties, pensions and management fees unless a tax treaty or a specific rule brings it down.
“Withholding tax” also means the tax an employer takes off your pay. Those are different beasts, so the non-resident kind comes first here, and then you’ll get pointed the right way if you meant your paycheque.
What counts as a Part XIII payment?
The CRA’s NR4 guide lists pensions, annuities, management fees, interest, dividends, rents, royalties, estate or trust income, and payments for film or video acting services. If you pay one of these to someone who lives outside Canada, you’re the one who has to hold back the tax and send it to the CRA. The recipient doesn’t do it.
That’s a shock to many small landlords and business owners, who assume the other person handles it. They don’t. You do, and if you don’t, the CRA can assess a penalty of 10% of the tax you should have withheld. A second or later failure in the same year can bring 20% if it was knowing or grossly negligent.
Picture Marc, who runs a small design shop in Moncton and pays a freelance consultant in France a management fee. He’s the one on the hook, not the consultant, and finding that out after the fact is an expensive way to learn.
Which withholding tax rate applies?
| Case | Rate |
|---|---|
| Standard rate on Part XIII amounts | 25% |
| Acting services in a Canadian film or video production | 23% |
| Where a treaty or a rule in the Act applies | Lower rate or exemption |
Treaty rates by country aren’t listed here, because the CRA’s rates page doesn’t break them down and they couldn’t be confirmed from one source. The CRA points to its Part XIII tax calculator and to Information Circular IC76-12R8 for that. Rates and exemptions change, so look them up on the day you pay.
To get a treaty rate, the person you pay generally has to show they qualify. The CRA uses Form NR301, a declaration of eligibility for reduced tax under a treaty. Get it before the payment, not after.
Rent has its own twist. It’s normally taxed at 25% on the gross amount. If the owner uses a Canadian agent and the CRA approves an NR6 election, the agent may withhold on the net amount instead, but the gross rent still goes on the NR4 slip.
A $10,000 example
Suppose you pay a non-resident $10,000 of a taxable Part XIII amount. At the 25% standard rate, you withhold $2,500 and pay them $7,500. Under a treaty rate of 15% (an imagined figure, only for the arithmetic), you’d withhold $1,500 and pay $8,500. The gap is $1,000, which is why the paperwork matters.
The money goes to the CRA, not to the person you paid. The CRA needs it by the 15th day of the month after the month you paid or credited the amount. Pay a landlord abroad on March 5, and the tax is due April 15.
Filing the NR4 slip
You report what you paid and withheld on an NR4 slip and summary. The deadline is the last day of March following the calendar year. Payments made in 2025, for instance, are reported by March 31, 2026. For payments made in 2026, that rule points to the end of March 2027, but check the CRA’s NR4 page for the exact date once it’s published. Estates and trusts get 90 days after their tax year ends instead.
What are the common slip-ups?
Paying first and asking questions later is the big one. Once the full amount has gone out the door, you can’t easily claw back the tax from someone overseas, so you end up covering it yourself. The others are guessing a treaty rate without a declaration on file, mixing up the remittance date (the 15th of next month) with the NR4 date (end of March), and treating a one-off payment as too small to bother with. There’s no tiny-payment exemption in what was reviewed here.
What if you meant tax taken from your pay?
If you were asking why your pay stub shows tax taken off, that’s payroll withholding for employees. The rules and rates differ. The payroll deductions calculator shows what comes off a salary in your province, and the take-home pay calculator gives the net figure. Employers who remit payroll can use the payroll remittance calculator.
Taking money out of an RRSP is a third case. The tax withheld on that depends on the amount, and the current brackets aren’t confirmed here. Use the RRSP withdrawal tax calculator to see the effect on your return, and check the withholding on your bank’s confirmation.
The sources behind this page
The 25% rate, the 23% acting rate, the remittance date, the NR4 deadline and the penalties come from Canada Revenue Agency pages on Part XIII tax, all read in September 2026. The treaty rate in the example is invented for illustration. No level of government runs or endorses this site.
Frequently asked questions
What is the standard withholding tax rate for non-residents?
It's 25% on amounts taxable under Part XIII, such as interest, dividends, rents and royalties. A treaty or the Act can reduce it.
Who has to withhold?
The Canadian resident who pays or credits the amount. The recipient doesn't do it for you.
When do I send the tax to the CRA?
By the 15th day of the month after the month you paid or credited the amount.
When is the NR4 due?
The last day of March following the calendar year of the payment.
What if I forget to withhold?
The CRA can assess a penalty of 10% of the tax you failed to deduct, and 20% for repeat failures.
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