Schedule 91 and Schedule 97: The Treaty-Based T2 Return for Non-Resident Corporations in Canada

Schedule 91 and Schedule 97 are the two T2 schedules the CRA uses to track non-resident corporations. Schedule 97, Additional Information on Non-Resident Corporations in Canada, is filed by every non-resident corporation that files a T2. Schedule 91, Information Concerning Claims for Treaty-Based Exemptions, is added when the corporation claims that a tax treaty exempts its Canadian profits or a gain. Together they turn an ordinary T2 into a treaty-based return. This guide covers who must file, what goes on each schedule line by line, the six-month deadline, the penalty, and how the return recovers the 15% Regulation 105 withholding, with every figure checked in September 2026 against the CRA's T2 guide (T4012), the 2021 schedules, the Income Tax Act and the Canada-US treaty.

What is a treaty-based T2 return?

A treaty-based return is a T2 filed by a non-resident corporation that carried on business in Canada, or disposed of treaty-protected property, but reports no Part I tax because a tax treaty gives the taxing right to its home country. The CRA's non-resident corporations page states that the filing obligation applies even if the profits are claimed as exempt under a treaty: the return computes no tax, it discloses the Canadian activity so the CRA can test the exemption.

The legal basis is Article VII. Under Article VII(1) of the Canada-US Tax Convention, the business profits of a US resident are taxable only in the United States unless it carries on business in Canada through a permanent establishment (PE); the UK treaty and most others use the same OECD wording. No PE means a treaty-based return; a PE means a regular T2 with tax on the profits attributable to it. Our guide to the Canada-US tax treaty and its implications covers the articles in more depth.

Which non-resident corporations have to file a T2 in Canada?

Paragraph 150(1)(a) of the Income Tax Act requires a corporation to file within six months after the end of the year if at any time in the year it carried on business in Canada, had a taxable capital gain or disposed of taxable Canadian property, or if Part I tax is payable or "would be, but for a tax treaty, payable". Residence in Canada is not a condition. The registration steps that come before a first return are in our complete guide to non-resident corporations in Canada.

"Carrying on business in Canada" is broader than having an office. Section 253 deems a non-resident to carry on business in Canada if it produces, manufactures or constructs anything in Canada in whole or in part, solicits orders or offers anything for sale in Canada through an agent or servant, or disposes of Canadian real or resource property. Sending staff to deliver a service contract on Canadian soil is carrying on business under the ordinary meaning. The only relief is subsection 150(5): a corporation whose sole Canadian trigger was a disposition of taxable Canadian property can skip the return where no Part I tax is payable, it has no unpaid prior-year liability, and each property was excluded property or covered by a section 116 certificate. A corporation that carried on business in Canada gets no exception: it files, exempt or not.

Situation during the year	T2 required?	Schedules
Carried on business in Canada, no PE, treaty country	Yes, treaty-based	Schedule 97 (box 01) and Schedule 91
Carried on business through a PE, or resident of a non-treaty country	Yes, regular T2 with Part I tax	Schedule 97 (box 07), Schedule 20, full GIFI
Only disposed of treaty-protected taxable Canadian property (shares, not real property)	Yes, treaty-based	Schedule 97 (box 01) and Schedule 91 Part 2
Only disposed of taxable Canadian property in an excluded disposition under 150(5)	No	Section 116 certificate only
Only received dividends, interest, rent or royalties, no business in Canada	No T2 for that income	Part XIII withheld by the payer; treaty rate claimed on NR301, NR302 (partnerships) or NR303 (hybrid entities)

Passive income is a separate regime: Part XIII withholding is the final tax, claimed at treaty rates through declarations to the payer, and the rates are in our guide to Canadian withholding tax for non-resident companies and their shareholders.

Treaty-based return or regular T2: which one applies?

The dividing line is the permanent establishment. Article V of the Canada-US treaty defines a PE as a fixed place of business through which the business is wholly or partly carried on: an office, branch, factory, workshop or mine. The Fifth Protocol, signed 21 September 2007, added paragraph 9, a services PE rule that catches US providers with no office in Canada. A US enterprise is deemed to have a PE in Canada if either:

• an individual performs the services in Canada for 183 days or more in any twelve-month period, and during that period more than 50% of the enterprise's gross active business revenues come from the services that individual performed in Canada; or
• the services are provided in Canada for 183 days or more in any twelve-month period on the same or a connected project for customers who are Canadian residents or maintain a PE in Canada.

Below those thresholds, with no fixed place and no dependent agent, the return is treaty-based. Above them, the corporation pays Part I tax on the PE's profits and Part XIV branch tax, which is 25% under the Act but capped at 5% by Article X(6) of the US treaty with the first $500,000 of cumulative Canadian earnings exempt, calculated on Schedule 20. Our comparison of a Canadian subsidiary versus a branch walks through that decision.

Item	Treaty-based return (no PE)	Regular T2 (PE, or no treaty)
Part I income tax	Nil, exemption claimed under Article VII	Federal and provincial tax on PE profits
Part XIV branch tax	None	25%, or 5% under the US treaty above $500,000
Schedules	97 (box 01) and 91	97 (box 07), 20, 1 and the usual set
GIFI financial statements	Not required (RC4088)	Required
Regulation 105 withholding	Refunded in full	Credited against Part I tax; excess refunded

What is Schedule 97 and what goes on it?

Schedule 97 is the identification schedule. The form states: "Non-resident corporations must complete and file this schedule with their T2 Corporation Income Tax Return." The T2 guide ties it to line 080: a corporation that answers no to whether it is a resident of Canada enters its country of residence at line 081 and files Schedule 97. Part 1 asks for the country of incorporation (line 200) and, for a corporation incorporated in Canada, whether a certificate of discontinuance was issued (line 210). Part 2 is one question at line 300: tick the box that most closely applies.

Line 300 box	Who it is for	Attach
01 Treaty-based exempt corporation	Carried on a treaty-protected business in Canada, or disposed of treaty-protected taxable Canadian property other than real property	Schedule 91; for a refund of withholding, the original T4A-NR and a copy of the contract
02 Disposition of taxable Canadian property	Disposition not protected by treaty	T2064 or T2068 (section 116)
03 Section 216	Election to pay Part I tax on net Canadian rental income	Due within two years, or six months with a 216(4) election
04 Travelling corporation	Entertainer or athlete services for a limited period	Schedule 20
06 Emigrant corporation	Ceased to be resident in Canada	Part I and Part XIV apply
07 Canadian branch	Business income through a branch in Canada	Schedule 20
08 US LLC, LLP or LLLP	Fiscally transparent US entity	NR303 if eligible under Article IV(6); otherwise Schedule 20, no treaty rates
09 to 12	Authorized foreign banks, insurers, actor corporations (section 216.1)	Schedule 92 for banks

Box 01 carries the sentence behind most missing refunds: "If you are claiming a refund of the withholding tax for services rendered in Canada, provide the original T4A-NR slip along with a copy of your contract." Box 08 is the trap for US LLCs: under Article IV(6) a fiscally transparent LLC gets treaty benefits only to the extent its income is derived by a US-resident qualifying person, and it files Form NR303. An LLC that does not qualify is not a US resident for treaty purposes and pays Part I and Part XIV in full.

What is Schedule 91 and what goes on it, line by line?

Schedule 91 is the treaty claim itself. Its header covers a non-resident corporation that carried on a treaty-protected business in Canada or disposed of treaty-protected taxable Canadian property in the year, or in a previous year if a Part I liability would arise this year but for the treaty. All amounts are in Canadian funds. It opens with the home-country taxpayer identification number (line 105) and year-end (line 110), which is how the CRA matches the return to the foreign filing.

Line	What it asks	Why the CRA wants it
111	Province or territory where revenue was earned (MJ if more than one)	Provincial allocation if the exemption fails
112 and 113	Business activity code, 01 (entertainment) to 11 (other), including 03 construction, 07 business professional, 08 engineering and technical	Risk profiling by industry
115 to 118	Canadian revenue from sale of goods, services provided in Canada, financing, and other	Separates goods from services, where the 183-day tests bite
125	Total Canadian revenues	Materiality and the 50% revenue test
135	Rented, leased or owned physical facilities in Canada, with nature and address	The fixed place of business test
146	Treaty article and paragraph under which the exemption is claimed	Names the legal basis
155, 158, 159	Main Canadian customers with contract start and completion dates; attach all T4A-NR slips	Matches the payer's withholding filings; tests the connected-project rule
160 and 161	Canadian-resident employees: number and salary paid	Local staff suggest a fixed place
165, 166, 170, 171	Non-resident employees: number, amount paid, employment period in Canada	Regulation 102 payroll exposure
175	Calendar days or part days any non-resident employee was physically present in Canada	The 183-day services PE test
180 to 192	The same details and day count for subcontractors	Subcontractor days can count toward a project PE
195 and 196	Was a Regulation 105 waiver applied for, and did the CRA grant it	Reconciles the waiver file with the return
Part 2, 201 to 211	Treaty-protected taxable Canadian property disposed of: description, proceeds, adjusted cost base, gain or loss, treaty article; attach T2064 or T2068	Share dispositions exempt under the capital gains article

Read as a whole, Schedule 91 is the CRA's PE questionnaire: line 135 tests the fixed place, lines 175 and 192 the 183-day thresholds, and the contract dates at 158 and 159 whether separate engagements are one connected project. Part days count, so a consultant who flies in Monday and out Wednesday has spent three days in Canada. Keep a per-person travel log during the year; reconstructing it from expense reports is where most Schedule 91 errors start.

Which lines of the T2 does a treaty-based return complete?

Per the CRA's non-resident corporations page, a treaty claimant completes lines 001 to 082 on page 1, lines 164, 170 and 171 on page 2, lines 270 to 289 except 271 on page 3, and lines 780 to 990 on page 9 where they apply. Line 080 is no, the country goes at 081, and line 082 (claiming a treaty exemption) is yes, which triggers Schedule 91. No Schedule 1 is needed because no income is taxed, and the GIFI guide (RC4088) says not to use the GIFI or GIFI-Short where the corporation files under section 115 only because it is a treaty-based exempt corporation. The return must be in Canadian funds only; the section 261 functional currency election is not available. And although corporations generally must file electronically for tax years starting after 2023, the CRA lists non-resident corporations as an exception; the T2 guide directs them to mail the return to the Sudbury Tax Centre, with Corporation Internet Filing open to some.

When is a treaty-based T2 return due?

Six months after the end of the tax year, the same as any Canadian corporation. A December 31 year-end is due June 30; a September 30 year-end is due March 31; a year ending mid-month is due the same day of the sixth month after it. A deadline on a weekend or CRA-recognised holiday moves to the next business day.

Event	Deadline	Source
T2 return, treaty-based or regular	Six months after year-end	ITA 150(1)(a); T4012
Balance of tax owing, if any	Two months after year-end (the three-month extension is for CCPCs only, and a non-resident cannot be a CCPC)	CRA balance-due day page
Return filed to receive a refund	Within three years of year-end	CRA when-to-file page
Regulation 105 waiver (Form R105)	At least 30 days before services begin or the first payment	CRA waiver page
Payer's T4A-NR slips and summary	End of February of the following year	IC75-6R2
Late filing, non-resident corporation	Greater of $100 and $25 per day, 100-day cap	ITA 162(2.1)

A treaty-based return has no balance owing, so the only date that matters is the six-month filing deadline, and the only thing that moves after it is the penalty clock.

How does Regulation 105 withholding interact with the treaty-based return?

Regulation 105 requires anyone paying a non-resident a fee, commission or other amount for services rendered in Canada, of any nature whatever, to withhold 15%. Information Circular IC75-6R2 confirms this is not a final tax but a payment on account of the non-resident's potential Part I liability, settled when its Canadian return is assessed. The payer reports it on a T4A-NR. For services performed in Quebec, Revenu Québec requires a further 9% with its own waiver (Form TP-1016-V), so a US company working in Montreal sees 24% held back.

A treaty-protected corporation has two routes. It can stop the withholding in advance with a Regulation 105 waiver application on Form R105, filed at least 30 days before services begin or the first payment, on treaty-based grounds (no PE) or income-and-expense grounds; without a CRA approval letter the payer must withhold the full 15%, and lines 195 and 196 of Schedule 91 report the outcome. Or it can recover the money afterwards through the treaty-based return itself: the T2 with Schedule 97 (box 01), Schedule 91, the original T4A-NR and the contract establishes that no Part I tax is payable, and the CRA refunds the withholding on assessment. The step-by-step is in our guide to Regulation 105 refunds for US companies through a treaty-based T2. The refund route works only within three years of year-end, and a late return still attracts the 162(2.1) penalty.

Worked example: a US corporation providing services in Canada for 60 days

Ridgeway Controls Inc., a Delaware corporation with a December 31 year-end, sends two engineers to Alberta to commission a plant control system. They are on site for 60 days between February and April 2026, the fee is CAD $240,000, the company rents no premises in Canada, and it did not apply for a waiver.

Step	What happens	Amount
Payment	The Alberta client withholds 15% under Regulation 105, remits it and issues a T4A-NR	$36,000 withheld; $204,000 paid
PE test	No fixed place (line 135 no); 60 days is below the 183-day threshold in Article V(9); no dependent agent	No PE; profits exempt under Article VII(1)
Filing obligation	Ridgeway carried on business in Canada, so 150(1)(a) requires a T2 even with no tax owing	Due June 30, 2027
Schedule 97	Line 200 United States; line 300 box 01	Schedule 91 attached
Schedule 91	Line 111 AB; 112 code 08; 116 and 125 $240,000; 135 no; 146 Article VII(1), noting Article V(9); 155 the client and contract dates; 165 two non-resident employees; 166 salary for the Canadian period; 175 sixty days; 195 no	Original T4A-NR and contract attached
Assessment	Part I tax nil; withholding refunded	$36,000 refund
If filed 100 or more days late	162(2.1) penalty assessed even though the return shows a refund	$2,500

Change one fact and the outcome flips. If the same project ran 200 days within twelve months, Article V(9)(b) deems a services PE: one project, a Canadian-resident customer, 183 days or more. Ridgeway would file a regular T2 with Part I tax on the profits attributable to the Canadian work, Schedule 20 for branch tax at the 5% treaty rate above the $500,000 exemption, and full GIFI statements, with the $36,000 credited rather than refunded. Either way the company needs somewhere to receive the $204,000; our guide to opening a Canadian business bank account remotely as a non-resident compares the options.

What happens if a non-resident corporation does not file?

Three things, in rising order of cost. First, the penalty. Subsection 162(2.1) sets the late-filing penalty for a non-resident corporation at the greater of the normal penalty under 162(1) or 162(2) and an amount equal to the greater of $100 and $25 times the number of days late, to a maximum of 100 days. On a treaty-based return the unpaid tax is nil, so the normal percentage penalty is nil and the day count governs: $100 for the first four days, $1,000 at 40 days, $2,500 at 100 days and beyond, per return, per year. Parliament wrote it so that nil-tax non-resident returns could not be skipped for free.

Failure	Consequence	Source
Treaty-based return late, no tax owing	Greater of $100 and $25 per day, capped at 100 days ($2,500)	ITA 162(2.1)
Regular T2 late with tax owing	5% of unpaid tax plus 1% per month up to 12 months, or the flat amount if greater; interest from the balance-due day	ITA 162(1); CRA penalties page
Repeated late filing after a demand	10% plus 2% per month up to 20 months	ITA 162(2)
Return never filed	Regulation 105 withholding never refunded; lost after three years from year-end	CRA when-to-file page
No T4A-NR or contract attached	Refund not processed until provided	Schedule 97, box 01

Second, the money: the CRA already holds 15% of the corporation's Canadian fees, the payer's T4A-NR tells it who the corporation is, and a corporation that never files has given up that 15%, permanently after three years. Third, the exemption itself. A treaty exemption is a claim the corporation makes and supports; the CRA does not apply it by default, and a non-filer with T4A-NR slips on record can be asked for a return and assessed on the information the CRA holds. Filing the treaty-based return on time is the cheapest tax position a non-resident corporation will ever take in Canada.

Frequently asked questions

What is Schedule 91 on the T2 return?

Schedule 91, Information Concerning Claims for Treaty-Based Exemptions, is the T2 schedule a non-resident corporation files when it claims that a tax treaty exempts its Canadian business profits or a gain on treaty-protected property. It reports Canadian revenue by type (lines 115 to 125), whether the corporation had physical facilities in Canada (line 135), the treaty article relied on (line 146), its main Canadian customers with contract dates, the number of employees and subcontractors and the days they were physically present in Canada (lines 160 to 192), and whether a Regulation 105 waiver was requested (lines 195 and 196).

What is Schedule 97 and who has to file it?

Schedule 97, Additional Information on Non-Resident Corporations in Canada, must be filed by every non-resident corporation that files a T2 return, whether or not it claims a treaty exemption. It records the country of incorporation and, at line 300, the category the corporation falls into: treaty-based exempt corporation (box 01, which requires Schedule 91), disposition of taxable Canadian property, section 216 rental filer, travelling corporation, emigrant corporation, Canadian branch, US LLC, authorized foreign bank, insurer or actor corporation.

Does a US company have to file a Canadian T2 if it has no permanent establishment?

Yes. Paragraph 150(1)(a) of the Income Tax Act requires any corporation that carried on business in Canada during the year to file a T2 within six months of its year-end, and the CRA states the requirement applies even when the profits are claimed as exempt under a tax treaty. A US company with no permanent establishment files a treaty-based return: a T2 with Schedule 97 (box 01) and Schedule 91, showing nil Part I tax. Without that return there is no refund of the 15% Regulation 105 withholding.

When is a treaty-based return due in Canada?

Six months after the end of the corporation’s tax year, the same deadline as any other T2. A December 31 year-end is due June 30; a September 30 year-end is due March 31. Any tax that is actually owing (for example where a permanent establishment exists) is due two months after year-end, and a return must be filed within three years of the year-end to receive a refund.

What is the penalty for a non-resident corporation that does not file a T2?

Under subsection 162(2.1) of the Income Tax Act (or, where no tax is payable, the catch-all penalty in paragraph 162(7)(b) at the same rate, as the Federal Court of Appeal held in Exida.com, 2010 FCA 159), a non-resident corporation that files late pays the greater of the normal late-filing penalty (5% of unpaid tax plus 1% per complete month, up to 12 months) and a flat amount equal to the greater of $100 and $25 for each day the return is late, capped at 100 days. Because a treaty-based return has no tax owing, the normal penalty is nil and the flat amount applies: $100 for a few days late, up to $2,500 per return at 100 days or more.

How does a US company get its Regulation 105 withholding back?

By filing a treaty-based T2 return for the year the fees were paid. Schedule 97 instructs a treaty-based exempt corporation claiming a refund of withholding on services to provide the original T4A-NR slip and a copy of the contract. On assessment, the CRA refunds the 15% because no Part I tax is payable. The alternative is to stop the withholding in advance with a Regulation 105 waiver (Form R105), filed at least 30 days before the services begin or the first payment is made.

Do non-resident corporations follow the same T2 deadlines as Canadian corporations?

The filing deadline is identical: six months after year-end. Two differences apply. The three-month balance-due extension is only for Canadian-controlled private corporations, so a non-resident corporation with tax owing must pay within two months of year-end. And non-resident corporations are excluded from the mandatory electronic filing rule for tax years starting after 2023; the CRA’s T2 guide directs them to mail the return to the Sudbury Tax Centre, although some can use Corporation Internet Filing.

Does a non-resident corporation have to file financial statements (GIFI) with a treaty-based return?

No. The CRA’s GIFI guide (RC4088) says not to use the GIFI or GIFI-Short if the corporation is filing under section 115 only because it disposed of taxable Canadian property or because it is a treaty-based exempt corporation. A non-resident corporation with a permanent establishment files a regular T2 and does need GIFI financial statements. Whatever is filed must be in Canadian dollars; the functional currency election is not available to non-residents.