Regulation 805.1 Payee Certificate

Section 805 of the Income Tax Regulations (ITR) states that every non-resident person who carries on business in Canada is taxable under Part XIII of the Income Tax Act (ITA) on all relevant amounts (interest, dividends, royalties etc.) otherwise taxable under Part XIII, except

  1. those amounts that may be reasonably attributed to the business carried on by them through a permanent establishment in Canada or

  2. that are required by subparagraph 115(1)(a)(iii.3) of the Act to be included in computing the person’s taxable income earned in Canada for the year.  

Therefore, provided that the amounts paid meet the above mentioned exemption requirements of Regulation 805, there is no obligation to withhold tax under Part XIII and advanced approval from the CRA is not required in order for the payer to not withhold tax on the amounts paid.  

However section 805.1 of the ITR allows a non-resident to request a payee certificate from the CRA that an amount paid or credited to them is as described in (a) or (b) above. Although issuing such a payee certificate does provide assurance that the payer is not obligated to withhold, as long as the amounts paid or credited to the non-resident are as described in (a) or (b) above, the payer is not obligated to withhold Part XIII from the amount.   

The income is reported on the non-resident's Canadian income tax return and subject to Canadian part I tax as if earned by a resident of Canada.  

Permanent establishment, for purposes of this section, is defined in section 8201 of the Income Tax Regulations.  

The CRA does not currently have an application form for a Regulation 805.1 payee certificate request. A request should be sent in the form of a letter to the applicable International Waivers Centre of Expertise.  

Note: A non-resident of Canada receiving income normally subject to Part XIII withholding tax that is attributable to a permanent establishment in Canada cannot use Form NR301, NR302, or NR303 to prove to the payer that no withholding tax is required. 

The waiver request should include the following information. This list is not exhaustive, and further information may be required:

  • full legal name and address of the applicant;
  • business number (BN);
  • the social insurance number (SIN) or individual tax number (ITN) if the applicant is an individual;
  • payer's full name and address;
  • type and nature of business the applicant is involved with in Canada;
  • where the services are being performed in Canada;
  • whether the applicant and the payer are dealing at arms-length;
  • type of part XIII income the application is for;  

The certificate request may be presented to any CoE that serves the location where the business is located. For more information on where to send your waiver request, see Where to send waivers application on our website.  

Certificate requests should allow for a 30 day processing period. This timeframe is necessary in order to provide sufficient time for the CoE and to review the application.

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