Digital Nomad
Non-Residents & Regulation 105 Waivers: What Digital Nomads Should Know
If you’re a non-resident providing services in Canada or earning Canadian-source income, a Regulation 105 waiver can mean big savings—here’s how it works and recent consultation developments.
By NomadicTax Research Team • 5-8 min read • April 13, 2026
## What Is Regulation 105?
Canada’s **Regulation 105** requires a **25% withholding tax** on payments to non-residents for services performed in Canada. This applies to contractors, consultants, artists, or any remote worker doing work “in Canada”. Non-resident means you're not a Canadian resident for tax purposes.
### What’s the Problem?
- The taxation can feel harsh, especially if your actual tax owing is far less than the withheld 25%.
- The process for getting a waiver has traditionally been slow, opaque, and burdensome.
## Recent Developments
A new **consultation** was published **last week** by the CRA titled *Consultation on the Income Tax Regulation 105 Waiver Process*. Inputs were sought to simplify the waiver application, reduce administrative burden, and develop digital processing of applications.([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/rendering-services-canada/share-your-thoughts-income-tax-regulation-105-waiver-process/consultation-income-tax-regulation-105-waiver-process.html?utm_source=openai))
That means changes may be coming to streamline how non-residents apply and possibly faster or more flexible processes.
## What Should You Do Now?
- **Determine eligibility**: If you expect your actual Canadian tax liability to be less than the amount withheld under Reg 105, you’re eligible to apply for a waiver.
- **Start collecting documents**: Contracts, proof of income, expenses, residency status, possibly treaty-based relief—all will help support a waiver application.
- **Watch for formal rules**: The consultation will likely result in regulatory changes—keep an eye on official Canada.ca or CRA announcements. If a digitized waiver process arrives, acting early means you’ll be ahead.
## Example
Imagine Maria, a digital nomad based in Spain, who does consulting work for a Canadian tech company. Under Reg 105, her income would have 25% withheld unless she obtains a waiver. She expects her final tax liability under a treaty to be closer to 10%. By preparing clear contracts, expense documentation, and applying for the waiver (once the process improves), she may reduce withholding significantly and improve cash flow.
**Bottom line**: If you’re non-resident earning service income tied to Canada, Regulation 105 matters. The new consultation signals possible relief—but the key is preparing ahead, collecting documentation, and staying plugged into CRA’s updates.