NR4 slips: paying rent, dividends and interest to a non-resident

Regulation 105 catches services performed in Canada. Part XIII catches money leaving Canada as passive income: a rent cheque to a landlord who moved abroad, a dividend to a shareholder who emigrated, interest on a loan from a family member overseas. All raise the same obligations, and all are commonly missed because they do not feel like payroll.

What Part XIII tax covers

Part XIII tax is a withholding tax imposed on certain amounts paid or credited to non-residents. The CRA lists pensions, annuities, management fees, interest, dividends, rents, royalties, estate or trust income, and payments for film or video acting services, when paid or credited to individuals (including trusts) or corporations that are not resident in Canada.

Note the phrase paid or credited. An amount credited to a non-resident's account — a dividend declared and recorded, interest accrued and applied — can trigger the obligation without cash moving.

Who has to withhold

The obligation lands on the payer or withholding agent. The CRA identifies a Canadian resident who pays or credits Part XIII amounts to a non-resident, agents such as banks or trust companies acting for a debtor, agents or other persons who receive Part XIII amounts for a non-resident from which tax was not withheld, and any other person — including a non-resident — who pays or credits amounts taxable under Part XIII.

The rate, and why the treaty answer is not automatic

Non-residents pay 25% tax on amounts taxable under Part XIII. That rate can be reduced or eliminated under the Income Tax Act or a bilateral tax treaty, and the CRA is clear that as the Canadian payer or withholding agent, you are responsible for withholding at the correct rate. The 25% rate applies to payees in non-treaty countries, and also to payees in countries with which Canada has a treaty that is not yet in effect. A separate rate of 23% applies to gross amounts for acting services rendered in Canada by a non-resident actor.

The NR4 slip: required more often than people expect

An NR4 slip must be completed for every non-resident to whom you paid or credited amounts described under Part XIII, even if you are not required to deduct any tax. The CRA states the slip is required even where no tax was withheld, or where none had to be withheld because of an exemption under the Act or a treaty.

There is a reporting threshold, and it is low. Amounts must be reported on an NR4 slip if the gross income paid or credited during the year is $50 or more. If you paid less than $50 but still withheld tax under Part XIII, the gross income and the tax withheld are reported anyway.

Deadlines

The NR4 information return — the slips plus the NR4 Summary — must be filed with the CRA, and recipients given their slips, on or before the last day of March following the calendar year to which the return applies. For an estate or trust, the deadline is no later than 90 days after the end of the estate's or trust's tax year. Where the last day of March falls on a Saturday, Sunday or public holiday recognized by the CRA, the return is due the next business day.

That March deadline sits close to, but is not, the T4, T4A and T5 slip deadlines at the end of February.

What it costs to get wrong

The exposure is structural rather than incidental. If you failed to deduct the required Part XIII tax from an amount paid or credited to a non-resident, the CRA states that you are liable for that amount even if you cannot recover it, and may be assessed accordingly. The CRA can also assess a penalty of 10% of the required amount of Part XIII tax you failed to deduct, along with interest on late remittances.

That is the sentence to remember. Once the gross amount has been paid to a non-resident who is no longer in the country, the withholding that should have been deducted becomes the payer's own cost.

Where this catches small Canadian businesses

• Rent to an emigrated landlord. A Canadian tenant or property manager paying rent on Canadian real property to an owner who has become a non-resident is squarely inside Part XIII. This is one of the most common surprises for real estate investors and their agents.
• Dividends to a shareholder who left Canada. A private company dividend does not stop being a Part XIII amount because the shareholder is family. The characterisation of the dividend itself — see eligible versus non-eligible dividends — is a separate question from the withholding.
• Interest on shareholder or family loans from abroad. Interest paid to a non-arm's-length non-resident is a classic missed slip.
• Royalties and licence fees. Software, content and trademark licence payments to foreign owners routinely fall in.

Payments for services performed in Canada are a different regime with a different rate and a different slip — see Regulation 105 withholding. Businesses that pay non-residents for both should expect to run both.

The bottom line

Part XIII is not complicated so much as easy to overlook. There is no payroll cycle to hang it on, and the recipient is usually happy to be paid in full. The discipline that works is to flag non-resident payees when the relationship starts, collect a treaty declaration before applying anything other than 25%, and put the March NR4 deadline on the same calendar as the February slip run.

This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique — please speak with a CPA before acting on anything here.