Electing Under Section 217: How Non-Residents Get Canadian Tax Back
If you have left Canada but still receive a Canadian pension, CPP, OAS, or RRSP and RRIF payments, your Canadian bank or plan administrator withholds a flat 25% and sends it to the Canada Revenue Agency. For many people that is more tax than they would owe as a resident. Section 217 of the Income Tax Act lets you elect to be taxed at ordinary graduated rates instead, and claim the difference back.
The section 217 election lets a non-resident of Canada file a Canadian return reporting certain Canadian-source income — pensions, CPP and QPP, OAS, most RRSP, PRPP and RRIF income, EI benefits — and pay tax at graduated rates instead of the flat 25% non-resident withholding. The CRA refunds any excess withheld. The return must be filed by June 30, and the CRA applies the election only if it works out in your favour, so electing cannot leave you worse off.
| Section 217 election | The rule |
|---|---|
| Who can elect | Non-residents and part-year residents of Canada |
| Instead of | Flat 25% non-resident withholding on eligible income |
| You pay | Graduated (resident-style) rates on that income |
| Filing deadline | June 30 — the CRA cannot accept a late election |
| Payment deadline for a balance owing | April 30 |
| Key schedules | Schedule C, then A, then B; attach your NR4 slips |
| Withheld tax goes on | Line 43700 |
| Reduce withholding in advance | Form NR5, filed by October 1 — approval lasts up to 5 years |
| Risk of electing | None on the tax itself — CRA applies it only if beneficial |
Source: Canada Revenue Agency, Electing under section 217. Verified August 2026.
What the section 217 election actually does
Canada taxes non-residents on most Canadian-source pension and retirement income through Part XIII withholding: a flat 25% of the gross payment, deducted at source, with no personal credits and no graduated brackets. It is a final tax, and for a retiree with modest income it is often far more than a Canadian resident would pay on the same money.
Electing under section 217 swaps that treatment. You file a Canadian return, report the eligible income, and calculate tax the ordinary way — graduated rates, with non-refundable tax credits. The tax already withheld is credited against the result, and the CRA refunds the excess.
This is different from the withholding rules that apply while you are still a Canadian resident. If you have not left Canada, the ordinary RRSP withholding tax rates apply instead, and section 217 is not relevant to you.
Which income qualifies
The CRA lists the Canadian-source income types eligible for a section 217 election:
- Old Age Security (OAS) pension
- Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits
- Most superannuation and pension benefits
- Most RRSP, PRPP, and RRIF income
- Employment insurance (EI) benefits
- Death benefits, certain retiring allowances, registered supplementary unemployment benefit plan income, most DPSP income, amounts from a retirement compensation arrangement, prescribed benefits under a government assistance program, and Auto Pact benefits
In practice this covers the three payments most Canadians abroad actually receive: CPP for non-residents, OAS, and RRIF withholding tax for non-residents on their converted retirement savings. If you emigrated partway through a year, the emigrant tax return for that year follows special part-year rules: you report your world income for the part of the year you were a Canadian resident, plus all eligible section 217 income for the part you were not, and you pay provincial or territorial tax instead of the non-resident surtax.
Some amounts are excluded, including OAS Act supplements, transfers made to acquire an annuity, RPP, RRSP, PRPP or RRIF with CRA authorization, amounts exempt under the Income War Tax Act, and income for services performed while you were not resident in Canada and not, or only occasionally, employed here.
The presence of EI on that list is worth noting: this election is not only for retirees. Someone who worked in Canada, moved abroad, and collected EI benefits can use it too.
The 90% rule that decides how much you get back
This is the part most explanations skip, and it is what determines whether a section 217 election saves you a lot or a little. Your access to Canadian non-refundable tax credits depends on how much of your world income you are reporting on the Canadian return.
- If you include 90% or more of your net world income in net income on the section 217 return, you may claim the full federal non-refundable tax credits.
- If you include less than 90%, your allowable credits are limited to the lesser of 14.5% of the eligible section 217 income paid or credited to you, or your full credits minus 14.5% of certain specific amounts.
If your Canadian pension is essentially all the income you have, you pass the 90% test, claim full personal credits, and the graduated-rate calculation typically lands far below a flat 25% of gross — producing a substantial refund. If your Canadian income is a small slice of a larger income earned in your new country, your credits are capped and the election is worth much less, sometimes nothing. The election helps most exactly the people who need it most.
You disclose world income on Schedule A, and the credit limit is computed on Schedule B. Because the calculation runs off your worldwide position, it is worth doing before you assume a refund is coming.
You cannot lose by electing
Here is the fact that should remove most of the hesitation around this election. The CRA states that when it assesses your return, the election will only apply if it is beneficial to you. If the graduated-rate calculation would leave you worse off than the flat 25% withholding, the CRA simply does not apply it.
In other words, the downside of filing a section 217 return is the effort of filing, not a risk of higher tax on that income. The comparison the CRA runs is between the total tax payable on your return and what you would have paid without the election — the non-resident tax required to be withheld, plus tax on any Canadian employment, business, partnership, or taxable-Canadian-property income.
One caution: if too little was withheld during the year — for example because the CRA approved a Form NR5 to lower your withholding — you can still end up with a balance owing. And if the election turns out not to be beneficial but your payer over-withheld anyway, the route to a refund is Form NR7-R, not the section 217 return.
See how much tax is being held back on a Canadian withdrawal before deciding whether to elect.
The June 30 deadline is absolute
A section 217 return is due June 30 of the following year, not the usual April 30. The CRA is unambiguous that it cannot accept the election if you file after June 30.
Miss it and the consequence is permanent for that year: the amount withheld becomes your final tax obligation on that income. There is no late election, and no second chance the following year for the year you missed. If less than the required amount was withheld, the CRA will assess you for the difference regardless.
Note the split deadlines. The filing deadline is June 30, but the payment deadline for any balance owing is April 30, so interest can accrue on an amount owing even while you are still within the filing window. The filing date can also differ if you are reporting Canadian employment or business income, net Canadian partnership income, or taxable capital gains on taxable Canadian property in the same return.
Form NR5: stop overpaying in the first place
Filing a section 217 return recovers tax a year or more after it was withheld. The NR5 form is the way to avoid the overpayment instead of chasing it, and it is the step most people learn about only after they have already lost a year to the flat 25%.
You file NR5 with the CRA by October 1, or before the first payment is due, and the CRA reviews whether a section 217 election would benefit you. If approved, your payers reduce the non-resident withholding at source for up to five years — but you must then file a section 217 return for each year covered by the approval. If your application is not approved, you can still file a section 217 return afterwards to claim a refund.
For a retiree living on monthly payments, the difference between receiving 75% of each cheque and receiving something closer to the correct amount is a genuine cash-flow improvement, not just a tax-timing point.
How to file
The mechanics are procedural rather than difficult:
- Write “SECTION 217” at the top of page 1 of the Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada.
- Report all eligible section 217 income paid or credited to you, plus any Canadian employment, business, partnership, or taxable-Canadian-property income.
- Complete Schedule C (the section 217 tax adjustment), then Schedule A (statement of world income), then Schedule B (allowable federal non-refundable tax credits).
- Enter the non-resident tax withheld, from your NR4 slips, on line 43700.
- Attach the schedules and your information slips. The CRA warns that omitting them delays assessment and any refund.
The CRA’s own guidance is spread across its pages on whether you should elect and the return and payment due dates, with the full instructions in Guide T4145.
Two related pieces sit alongside this one: how the flat withholding works in the first place, in our guide to RRSP withholding tax for non-residents of Canada, and what happens to your investments on the way out, in deemed disposition in Canada. If you are weighing whether to withdraw at all, the marginal tax rate concept is what the graduated calculation turns on, and the rest of our tools are in the free financial calculators hub.
Frequently asked questions
It is an election under section 217 of the Income Tax Act that lets a non-resident file a Canadian tax return and pay tax at graduated rates on certain Canadian-source income, instead of the flat 25% non-resident withholding tax. The CRA refunds any tax withheld above what is actually owed.
OAS, CPP and QPP benefits, most superannuation and pension benefits, most RRSP, PRPP and RRIF income, EI benefits, death benefits, certain retiring allowances, most DPSP income, retirement compensation arrangement amounts, and a few other prescribed benefits.
June 30 of the following year. The CRA cannot accept the election if the return is filed after June 30, and the tax withheld then becomes your final obligation on that income. Any balance owing is due by April 30.
Not on the tax itself. The CRA applies the election only if it is beneficial to you, so if graduated rates would produce more tax than the flat withholding, the election simply is not applied. You can still owe a balance if too little was withheld during the year.
If you include 90% or more of your net world income on the section 217 return, you can claim the full federal non-refundable tax credits. If you include less than 90%, your allowable credits are limited to the lesser of 14.5% of your eligible section 217 income, or your full credits reduced by 14.5% of certain specified amounts.
File Form NR5 with the CRA by October 1, or before your first payment is due. If the CRA approves it, your payers reduce the non-resident withholding at source for up to five years, and you must file a section 217 return for each year covered by the approval.
Last updated: August 2026. Rules verified against Canada Revenue Agency guidance.
This article is general information, not tax advice. The benefit of a section 217 election depends on your world income, the credits available to you, tax treaty provisions in your country of residence, and the specific income types involved. Deadlines are strict and a missed election cannot be reinstated. Confirm current rules with the Canada Revenue Agency and consider working with a cross-border tax professional.
