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.
What is the late filing penalty for Regulation 105?
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The waiver application that reduces or removes withholding on fees paid to a non-resident for services rendered in Canada. The exposure on this kind of filing is charged by reference to the form and the delay rather than to the tax, which is why an unfiled year with no tax can still be expensive.
What a late filing costs
The waiver application that reduces or removes withholding on fees paid to a non-resident for services rendered in Canada.

The carve-out
Withholding is on gross fees, so it frequently exceeds the eventual tax by a wide margin. The waiver — treaty-based or income-and-expense based — is applied for before the work is paid, and lead time is the binding constraint.
Your next step
The full treatment — who it binds, the deadline, the penalty and the fixed fee — is on Regulation 105 — waiver application. We would rather scope it properly than quote it quickly.
Checked and signed off for the 2025 and 2026 filing seasons by Udit Gupta, International Tax, Cross-Border Tax & Transfer Pricing Expert, Legal Quotient Consultants. General guidance only. Your own facts decide the answer, so bring them to a call before relying on this.
What these engagements turn on
Recovering withholding after a waiver application missed the payment date
An engineering consultant was engaged for a short Canadian installation and applied for the waiver in the week the invoice was settled. The application arrived too late to bind the payer, who withheld on the gross fee. We did not pursue the application further. Instead we assembled the engagement costs, including travel, a subcontracted technician and equipment hire, and filed the Canadian return for the year on a net basis, crediting the amount remitted under the consultant's name. The engagement produced a filed return, a reconciliation matching the payer's remittance records, and a refund of the excess withholding paid out by the CRA.
Read how this one runsTwo unfiled years for a non-resident trainer paid gross
A trainer delivered courses in Canada across two seasons and had withholding taken on every invoice. No waiver had been sought and no returns filed. The work was ordered year by year, because the treatment of equipment bought in the first season drove the deduction available in the second. Each year was filed on its own facts with the payer's remittance details attached. The engagement produced two filed returns, a written note explaining the cost allocation between them, and a request for relief from the late-filing penalties submitted with the filings rather than after them.
Read how this one runsAdvising a Canadian payer holding an invoice with no waiver in hand
A Canadian manufacturer had contracted a non-resident specialist and was being asked to release the invoice gross on the strength of a pending application. The question was the payer's own exposure, not the specialist's. We set out the two defensible courses, withholding and remitting or holding the payment until the waiver issued, and what each meant for the contract and for the specialist's cash position. The engagement produced a written position for the payer's file, a note to the specialist explaining the recovery route, and a remittance made on time under the payer's own account.
Read how this one runsTiming a waiver application around a fixed installation window
A non-resident fabricator had a Canadian commissioning date set by its client and an invoice falling due almost immediately afterwards. Lead time was the binding constraint, so the work started with the calendar rather than the treaty analysis. We mapped the application against the payment schedule, identified the payment that could realistically be covered, and said plainly that the earlier instalment could not be. The engagement produced a waiver application filed for the covered payment, a written instruction to the payer on how to treat each instalment, and no surprise for either side at settlement.
Read how this one runsRebuilding the costs of a Canadian engagement from incomplete records
A non-resident contractor arrived with a withholding slip, a bank statement and no organised record of what the Canadian work had cost. The tax position was straightforward; the evidence was not. We worked back from the engagement itself, matching flights, accommodation, a local subcontractor and consumables to the dates in the contract, and discarded anything that could not be tied to it. The engagement produced a documented schedule of deductible costs, a return filed on a net basis, and a file that would stand up if the CRA asked how each amount was arrived at.
Read how this one runsA treaty waiver refused and the position reworked on income and expense
A non-resident firm had applied on a treaty basis and been told its facts did not support the exemption claimed. Rather than argue the point, we changed route. The same engagement was reassessed on an income-and-expense basis, which asks a different question: not whether Canada may tax the fee, but how much of the gross fee is actually profit. The costs here were substantial and documented. The engagement produced a fresh application on the alternative basis, a written record of why the treaty claim was dropped, and a reduced withholding instruction the payer could act on.
Read how this one runsTen Years of Missed Returns Filed as One Engagement
Filing many years at once is a sequencing problem: carry-forwards, instalments and credits from the earliest year feed the latest. Filing them out of order is what turns a recoverable position into an assessed one.
Read how this one runsUnreported Foreign Income Disclosed Before the CRA Asked
A voluntary disclosure has to be genuinely voluntary — once a letter arrives, the route usually closes. The engagement establishes whether the programme is still available, prepares the years, and puts the relief request in with the filing rather than after it.
Read how this one runsAll case studies — every published engagement in one place.
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Regulation 105 — the questions that follow
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.
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.
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.
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.
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.
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.
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.



