NR4 Filing Deadline and Late Penalty Calculator
Paying a foreign shareholder or landlord creates two obligations, not one: remit by the fifteenth of the following month, and file the NR4 by 31 March. Work out both penalties, the interest and the gross-up.
total exposure
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The Exposure, Line by Line
| Item | Basis | Amount |
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Two Deadlines, Two Penalties
| Obligation | Deadline | Penalty for Missing It |
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The Rate That Should Have Applied
| Item | Position | Rate |
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Points That Decide This
What to Do Next
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Disclaimer: Part XIII of the Income Tax Act imposes a 25% withholding tax on certain amounts paid or credited by a resident of Canada to a non-resident, including dividends, interest, royalties, rent and certain management or administration fees, reduced where a tax treaty applies. A payer must withhold at the statutory 25% rate unless satisfied that the recipient is entitled to a reduced treaty rate, which generally requires a completed Form NR301, NR302 or NR303 on file before the payment. Amounts credited to a non-resident count even where cash has not moved, which catches dividends declared and left on loan account and management fees accrued to a parent. Withheld amounts must be remitted by the 15th day of the month following the month in which the amount was paid or credited. The failure to remit penalty is 10% of the amount that should have been remitted, rising to 20% where the failure is made knowingly or through circumstances amounting to gross negligence. The NR4 information return, comprising the slips and the summary, is due on or before 31 March following the calendar year to which it relates, or 90 days after the end of a trust’s tax year. The late filing penalty modelled here follows the general rule of $25 per day, with a minimum of $100 and a maximum of $2,500; the CRA also applies a penalty schedule based on the number of slips filed late, and the applicable amount depends on the circumstances. Interest is modelled at the prescribed arrears rate of 8% compounded daily. Where the payer bears the tax rather than deducting it, the amount paid is treated as a net amount and must be grossed up. This page is general information, not tax advice.
Two Obligations, and Missing Either One Costs
Businesses treat this as one thing and it is two. There is a monthly remittance obligation and an annual reporting obligation, they have different deadlines and different penalties, and you can comply with one while failing the other.
| Obligation | Deadline | Penalty |
|---|---|---|
| Remit the Part XIII tax | 15th of the month after payment | 10%, or 20% for a repeat |
| File the NR4 return | 31 March following the calendar year | $25 a day, capped |
The remittance penalty is the expensive one and it is charged on the tax, not on the payment. A ten percent penalty on the withholding due on a two hundred and fifty thousand dollar dividend is a real number, and it doubles to twenty percent where the failure is repeated or deliberate.
Credited Counts, Even When Nothing Moves
This is the trap that catches owner-managed groups with foreign shareholders. Part XIII applies to amounts paid or credited, and crediting an amount to a non-resident triggers the obligation whether or not cash left the bank.
- A dividend declared and left on shareholder loan account
- Management fees accrued to a foreign parent at year end
- Interest accrued on a shareholder loan from abroad
- Royalties booked but not yet paid
- Rent credited to a non-resident landlord’s account
The bookkeeping entry is the trigger. A group that declares dividends at year end to clean up a loan account and pays nothing out has created a Part XIII liability due by the fifteenth of the following month.
No NR301 Means Twenty-Five Percent
The treaty rate is not automatic. A payer must withhold at the statutory twenty-five percent unless satisfied the recipient qualifies for a lower rate, and in practice that means having a completed NR301 on file before the payment is made.
| Situation | Rate to Withhold |
|---|---|
| NR301 on file, treaty rate 5% | 5% |
| NR301 on file, treaty rate 15% | 15% |
| Treaty exists but no NR301 | 25% |
| No treaty | 25% |
An NR301 takes five minutes and is valid for three years. It is the single cheapest piece of compliance in this whole area, and the difference between five percent and twenty-five percent on a large dividend is enormous. Collect them from every non-resident recipient before the first payment.
Absorbing the Tax Means Grossing Up
Where the payer bears the tax rather than deducting it from the payment, the amount actually paid is treated as a net amount. The gross has to be computed by adding the tax back, and the tax is then calculated on that larger figure.
On a two hundred and fifty thousand dollar dividend paid in full at a fifteen percent rate, the implied gross is not two hundred and fifty thousand. It is that figure divided by eighty-five percent, and the tax runs on the larger number. That difference is pure additional cost to the payer.
The NR4 Is Required Even at a Nil Rate
Where the treaty reduces the rate to nil, the withholding is nil and the reporting obligation remains. An NR4 slip is still required for the amount paid or credited, showing the exemption code.
Payers who correctly determine that no tax is due and conclude there is nothing to file are common, and they collect the late filing penalty on a return that would have shown zero tax.
Rent to a non-resident landlord runs on a different track worth knowing about. The default is twenty-five percent of gross rent, but an NR6 undertaking filed before the start of the year allows withholding on net rental income instead, with a section 216 return filed afterwards. That is a materially better outcome and it has to be set up in advance.
Coming Forward Before They Ask
Where the CRA has not contacted you about it, a voluntary disclosure can remove the penalties entirely and grant partial interest relief. On an exposure where the penalty is a meaningful share of the total, that is worth assessing before doing anything else.
Once a query or an audit letter arrives, that route closes for the periods under review, and the calculation becomes one of paying rather than of managing.
What This Calculator Does Not Cover
- Regulation 105, which applies to service fees rather than to Part XIII amounts
- Regulation 102, which applies to employment income
- The NR6 and section 216 route for non-resident rental income
- Whether a specific treaty rate applies, which depends on the treaty and the recipient
- Thin capitalisation, which can convert denied interest into a deemed dividend
- The recipient’s position in their home country
Fix the NR301s first, then the history. Our withholding tax compliance service covers the forms, the remittances, the NR4 filings and the voluntary disclosure where one is available.
Frequently Asked Questions
Common questions on NR4 filings and Part XIII remittances.
Related Calculators and Guides
More tools for payers of non-residents.
Fix the Forms, Then Fix the History
Send us the payment records and the shareholder details. We will collect the NR301s, quantify the exposure, prepare the NR4 filings and assess whether a voluntary disclosure is still available.