Treaty based waivers involving Regulation 102 withholding
Effective January 1, 2017, employees can no longer use Form R102-J, Regulation 102 Treaty Based Waiver Application - Joint Employer / Employee. This form has since been removed from our website and the policies that were unique to waiver applicants using the R102-J form have also ended. Form R102-R is still available for non-resident employees who are asking for a waiver of amounts to withhold.
Non-resident employees providing employment services in Canada are subject to the same withholding, remitting and reporting obligations as those for Canadian resident employees. Therefore, any employer, including a non-resident employer, is required to withhold amounts on account of the employee’s income tax liability in Canada even if the employee is likely to be exempt from tax because of a tax treaty.
In order for the employer to be relieved of their obligation to withhold tax the employee would have to apply for and receive a waiver of withholding from the CRA.
However, there is an exception to the employer’s withholding obligation for certain non-resident employers paying employment income to non-resident employees for performing the duties of an office or employment in Canada after 2015. These non-resident employers, who apply for non-resident employer certification, will not have to withhold and remit tax on the payments they make to non-resident employees who are working in Canada for a limited time and are exempt from tax in Canada under a tax treaty.
Therefore, there is no need for an employee working in Canada to get a waiver of withholding from CRA if their employer has been certified as a qualifying non-resident employer and the employee is a qualifying non-resident employee.
As soon as an employee becomes aware that they will be working in Canada they should confirm if their employer is a qualifying non-resident employer and if they are required to apply for and obtain a waiver of withholding.
Obtaining a treaty based waivers
Employees resident in countries having a tax treaty with Canada that will exempt an employee's income from tax in Canada can apply for a waiver of withholding tax by completing and filing Form R102-R, Regulation 102 Waiver Application, with the Canada Revenue Agency (CRA).
A completed and signed Form R102-R must be submitted 30 days before either the start of the employment services in Canada or the initial payment for the employment services. We will make every effort to process properly completed and documented R102-R waiver applications in situations where they are received less than 30 days prior to the date employment services begin or the payment. The effective date of the Form R102-R waiver will be the date that the waiver application is approved.
Non-residents in the film industry also have to use R102-R Regulation 102 Waiver Application.
Where to send your R102-R Waiver Application
- In cases where the waiver applicant will provide services at numerous locations in Canada, send the waiver application and all attachments to any Centre of Expertise (CoE) that serves one of these locations. Otherwise, send it to the CoE that serves the location where the services will be provided. For additional information see: Where to send completed waiver application.
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