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

Regulation 105 covers services in Canada; Part XIII covers passive income leaving it: rent to an emigrated landlord, dividends to a shareholder abroad, interest to overseas family. Same obligations, often 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 on a non-resident payment

The obligation falls on the payer or withholding agent: a Canadian resident paying or crediting Part XIII amounts to a non-resident; agents such as banks or trust companies acting for a debtor; anyone receiving such amounts for a non-resident without withholding; and any other person, including a non-resident, who pays or credits them.

The rate, and why the treaty answer is not automatic

Non-residents pay 25% tax on amounts taxable under Part XIII, reducible or eliminable under the Income Tax Act or a bilateral tax treaty, and the CRA holds you, the payer or withholding agent, responsible for the right rate. The 25% applies in non-treaty countries and where a treaty is not yet in effect. Non-resident actors performing in Canada face 23% on gross amounts.

The NR4 slip: required more often than people expect

Complete an NR4 slip for every non-resident paid or credited Part XIII amounts, even if you are not required to deduct any tax, including where no tax was withheld or an exemption under the Act or a treaty applied.

Work out your own date with the NR4 deadline calculator.

The reporting threshold is low: report on an NR4 slip if gross income paid or credited in the year is $50 or more, and report anyway if less than $50 was paid but Part XIII tax was withheld.

Deadlines

File the NR4 return — slips plus NR4 Summary — and give recipients their slips by the last day of March after the calendar year. Estates and trusts have 90 days after their tax year-end. A weekend or CRA-recognized holiday moves the date to 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. Fail to deduct required Part XIII tax and, the CRA states, you are liable for that amount even if you cannot recover it. Add a possible penalty of 10% of the undeducted tax, plus 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 characterization 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 easy to overlook: no payroll cycle, and a payee happy to be paid in full. Flag non-resident payees at the start, get a treaty declaration before using any rate below 25%, and calendar the March NR4 deadline with the February slips.

General information for Canadian business owners, current as of July 2026. Not tax, legal or accounting advice, and no client relationship. Rules change, so please speak with a CPA before acting.