I forgot to apply for a Regulation 105 waiver before I was paid, what now?
The waiver has to be in place before the fee is paid, so once payment has gone through that route has closed for that payment. Nothing is lost permanently. The withholding was taken on your gross fee, and the way to get the excess back is the Canadian return for the year, on which you report the fee, deduct the costs of earning it and credit the amount withheld against the tax actually due. The refund is the difference. Late filing of that return carries, for the 2025 tax year, 5% of the balance owing plus 1% for each full month the return is late, to a maximum of 12 months.
Is there a penalty for filing the Regulation 105 waiver application late?
There is no separate late-filing penalty attached to the waiver application itself, because the waiver is a request made before the fact rather than a return with a due date. Filing it late costs you something different: the payer withholds on the gross fee and the money sits with the CRA until you file a return and claim it. What does carry a penalty is that return. For the 2025 tax year a late return attracts 5% of the balance owing plus 1% per full month outstanding, capped at 12 months. So the real exposure of a late waiver is delay in recovering cash, plus whatever the return costs you for being late.
Does the Canadian payer get penalised if my waiver is not approved in time?
The payer's obligation is to withhold from the gross fee unless it holds a waiver covering that payment. If the waiver has not issued when payment falls due, the payer withholds, and that is compliance rather than a failure. The payer's exposure arises the other way round, by releasing the gross amount on the strength of an application that has not yet been granted. In practice a payer told that an application is pending will either hold the payment or withhold and remit, and both are defensible. Ask which of the two they are doing, in writing, because it decides whether you are chasing a payment or a refund.
How far back can I file to recover Regulation 105 withholding?
Each year stands on its own. The withholding is credited on the return for the year in which the fee was received, so recovering two seasons of Canadian work means two returns rather than one combined filing. Older years are filed on the same basis: gross fee in, costs of earning it deducted, amount withheld credited. Where several years are outstanding the sequence matters, because the deductions in one year often depend on how something was treated in an earlier one. Gather the payer's slips and remittance records first. The amount you claim has to match what was actually remitted under your name.
Will the CRA waive the penalty if I did not know I had to file?
Not knowing is rarely enough on its own. Relief is discretionary and it is decided on the facts you put in front of the CRA, so the request has to read as a factual account rather than an apology: what happened, when you learned of the obligation, what you did once you knew, and what was outside your control. A first-time non-resident contractor who filed as soon as the position was explained reads differently from someone who was told twice. Relief is asked for in writing, and it is asked for alongside the filing rather than instead of it. Get the return in first.
My withholding was more than my actual Canadian tax, is that normal?
Yes, and it is the ordinary result rather than a mistake. Withholding under Regulation 105 is applied to the gross fee rather than to the profit on the engagement, so it takes no account of the flights, subcontractors, equipment hire or insurance standing behind the invoice. A contractor whose costs are most of the invoice will always see withholding well above the eventual tax. There are two routes to correcting it: the waiver, applied for before the fee is paid, and the return, filed afterwards. Missing the first does not remove the second. It only means the money comes back later than it needed to.
What is Form 1042-S and what do I do with it?
The statement a US payer issues to a non-resident showing US-source income paid and tax withheld — the non-resident counterpart to a 1099. Use it two ways. In your own country it evidences the US tax paid for credit purposes. And where the rate withheld was higher than your treaty entitlement, or the income was not taxable at all, the way back to the money is a US non-resident return claiming the refund. Check the income and exemption codes before assuming the rate was right. See Form 1042-S.
Is dividend income from Indian shares taxable for an NRI?
Yes. Dividends are taxed in the shareholder's hands, and the paying company withholds on payment to a non-resident. The treaty can reduce that withholding, but only if the documents are with the company before it pays: a tax residency certificate from your country, Form 10F, and a PAN on the register. Without them the domestic rate applies and your route back to the difference is a refund claim on an Indian return. See residency certificates and Form 10F.
