Form NR5: Lower Non-Resident Tax on Canadian Pensions

Form NR5 asks the CRA to let your Canadian payers withhold less non-resident tax on pensions, RRSP and RRIF payments, CPP, OAS and similar benefits, because you plan to elect under section 217 and file a Canadian return for those benefits. If the CRA approves it, the reduction usually covers five tax years, and you must file a section 217 return for every one of them. If you’re still planning your move, start with tax planning before moving from Canada to the US.

What is Form NR5 used for?

It’s an application to reduce the non-resident tax withheld from Canadian retirement and similar benefits paid to you while you live outside Canada. The current NR5 form says to use it “if you are a non-resident receiving qualifying Canadian income and would like to apply for a reduced tax rate on this income.”

Section 2 of the form lists the benefits it covers:

• Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits
• Old Age Security (OAS) pension
• Superannuation or pension benefits, including registered pension plan benefits
• Retiring allowances
• Death benefits
• Employment Insurance benefits
• RRSP payments
• RRIF payments

It doesn’t cover amounts you’re moving into an RRSP or registered pension plan. For pension, retiring allowance or RRSP amounts being transferred that way, the form points you to Form NRTA1 instead. It also isn’t the form for dividends, interest or rent: those run on Form NR301 (treaty rates) and Form NR6 (rent), covered in our Part XIII withholding guide.

You’ll need a Canadian social insurance number or an individual tax number. If you have neither, the form says to apply for an ITN on Form T1261 first. You send the completed NR5 to the Non-Resident Withholding Section in Sudbury, through Submit Documents in My Account, or by fax.

How does NR5 connect to the section 217 election?

NR5 is how you get the benefit of a section 217 election during the year instead of waiting for a refund. The form says the CRA will use your information “to determine if the election may benefit you,” and if it would, “we will authorize your Canadian payer(s) to reduce the amount of non-resident tax withheld from your benefits.”

The election itself is in ITA 217(2): no Part XIII tax is payable on your “Canadian benefits” if you file a return under Part I within six months after the end of the year and elect. Section 217(1) defines Canadian benefits by reference to the pension, RRSP, RRIF and similar paragraphs of section 212(1). You’re then taxed at regular graduated rates instead of the flat 25 percent.

The catch is world income. CRA’s section 217 guide, T4145, says you report your world income on Schedule A, and your tax is calculated on whichever is more: your Canadian taxable income or your net world income, with an adjustment for the part that isn’t taxable in Canada. Your federal non-refundable credits are limited if less than 90 percent of your net world income is on the return. For 2025, the guide caps them at the lesser of 14.5 percent of your eligible section 217 income and your full credits minus certain items. The guide also says the tax includes the surtax for non-residents.

That’s why NR5 asks for your estimated income from outside Canada. Someone whose income is almost all Canadian benefits keeps their full credits. Someone with a sizable US pension usually doesn’t.

When is the NR5 deadline, and how long does it last?

T4145 says to send the NR5 “on or before October 1 or before the first payment is due.” CRA’s NR5 5-year administrative policy says an approval “usually covers five tax years,” the reduced rate stays the same for all five unless your situation changes, and you file one form every five years.

The policy’s own example: a form filed in October 2017 and approved covers 2018 to 2022, and the next one is due in October 2022. Other rules from the same page and the form:

• Indexing doesn’t need a new form. Cost-of-living increases to your pension are already taken into account.
• Income changes do. The NR5 says to file an amended application “no later than 30 days after these changes occur” if your estimated world income changes.
• Amendments and the clock. An amended NR5 approved in the first year keeps the same five-year period. One approved in a later year counts as a new application and starts a new five-year period.
• Cancelling. You can ask the CRA to cancel at any time, but you still file section 217 returns for the years already approved.

What if I don’t file the section 217 return?

You pay the tax that wasn’t withheld. The NR5 form is blunt: if you don’t file within six months of the year end, “you will have to pay the full amount of tax that your payer(s) should have withheld,” and “We cannot process a return if it is filed late.” The NR5 policy page repeats that you must file a section 217 return “within six months after the end of each tax year.”

For the 2025 tax year, T4145 sets the deadline at June 30, 2026, with any balance owing due April 30, 2026 to avoid interest. A deadline on a weekend or CRA-recognized holiday moves to the next business day. File after June 30 and the CRA “cannot accept your section 217 election,” so the reduced withholding turns into a bill for the difference.

T4145 adds one more case. Even if you file on time, if the election turns out not to help and your payer withheld less because of the NR5, “you have to pay the difference between the required amount of non-resident tax and the amount withheld.” The NR5 is a forecast; the return is the test.

Should a US resident bother filing NR5?

Often not, because the treaty already does most of the work. For a US resident, CPP, QPP and OAS are taxable only in the US under Article XVIII(5), and periodic pension payments are capped at 15 percent under Article XVIII(2)(a). NR5 only pays off where section 217 tax would come in under those rates.

Payment type	Default Part XIII rate	Treaty rate for a US resident	Does NR5 help?
CPP or QPP	25%	0% (taxable only in the US)	No, there’s no Canadian tax to reduce
OAS pension	25%	0% (taxable only in the US)	No, though see the OAS note below
Periodic registered pension (for example monthly)	25%	15%	Sometimes: when nearly all your income is Canadian
RRIF payments up to the greater of 2 times the minimum or 10% of the January 1 value	25%	15%	Sometimes, same test
RRIF payments above that limit	25%	25%	More often, because the bar is 25%
RRSP withdrawal before maturity, or a lump-sum pension	25%	25%	More often, same reason

The 15 percent and 25 percent split comes from the definition of “periodic pension payment” in section 5 of the Income Tax Conventions Interpretation Act, which leaves out lump-sum pension payments, RRSP payments before maturity, and RRIF payments over the limit. For the lump-sum side in detail, see RRSP withdrawal withholding tax, and for managing the RRIF limit, the RRIF conversion guide.

On OAS, T4145 notes you may have to file Form T1136, the Old Age Security Return of Income, “even if you choose not to file a return under section 217.” Whether the recovery tax applies to a US resident is covered in the OAS clawback guide.

How does NR5 affect my US tax return?

The US taxes the same income. Article XVIII(1) lets the US tax pensions paid to its residents, and IRS Publication 915 says Canadian social security benefits paid to US residents are treated “as if they were paid under the social security legislation of the United States.” So CPP and OAS go on your US return like US Social Security, and your RRIF or pension goes on as pension income.

The link between the two returns is the foreign tax credit. IRS Publication 514 says only “the legal and actual foreign tax liability” qualifies, and the credit “cannot be more than” your US tax multiplied by your foreign-source share of taxable income. There’s a second US rule that matters here. Under Treas. Reg. 1.901-2(e)(5)(iii), when foreign law gives you an election that would permanently lower the foreign tax and you don’t use it, the extra tax isn’t a creditable foreign tax. So if a section 217 return would cut your Canadian tax, the credit is generally limited to the lower section 217 figure whether you file it or not. NR5 itself only changes timing: it gets you the section 217 result through lower withholding during the year instead of a refund after you file.

Where NR5 fits

NR5 is one of several forms a US resident with Canadian income deals with. The section 217 election guide covers the return itself and how the CRA calculates it, and the Part XIII guide covers every other income type and how to get over-withheld tax back.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.