Here's Why Rock Stars Get Stuck On A Highway To Tax Hell When They Tour Canada

Hells bells, I’ll be in Vancouver for my sixth AC/DC concert in a couple of weeks. My roots are classical: grade 10 piano, grade 6 theory and a stretch when I thought I’d become a music teacher rather than a tax accountant. But classical music is work for my brain; I can’t read or study with it playing because I end up dissecting the timing and key changes.

Classic rock and blues ask nothing of me: three chords, a simple beat and lyrics that are gloriously dumb, the perfect antidote to a day spent reading the Income Tax Act.

But old habits die hard, so by the time the house lights go up, part of my brain will drift toward an issue I’ve been thinking about at rock concerts for three decades: How does Canada tax a foreign rock band for playing here?

Every dollar AC/DC, Bruce Springsteen or any other non-resident performer earns for a Canadian show is caught by Regulation 105 of the Income Tax Act. It requires the payer, typically the promoter , to withhold 15 per cent of any fee paid to a non-resident for services rendered in Canada and remit it to the Canada Revenue Agency . Add another nine per cent for Revenu Québec if the show is in that province.

It doesn’t matter whether the performer is the headliner or a lighting director flown in from Los Angeles, if they’re a non-resident paid for services performed on Canadian soil, Regulation 105 catches it. Back in black.

The withholding isn’t a final tax; it’s a deposit against the actual Canadian liability. Which tax treaty applies depends on who’s being paid. Most larger acts tour through loan-out corporations , so the applicable treaty turns on where that entity resides, not where the band started out.

Whether that’s Article XVI of the Canada-United States treaty or something else, the mechanism works the same way: it preserves Canada’s right to tax entertainers’ Canadian-source income despite general rules that would otherwise shield a non-resident with no permanent establishment here.

That 15 per cent comes off gross Canadian revenue at each stop. Merchandise brings a wrinkle: t-shirts aren’t caught by Regulation 105, but the royalties a band earns by licensing its name to a merch company faces a 25 per cent withholding rate . Multiply that across a stadium tour and a touring party running into the hundreds, and it’s easy to see why entire specialist practices exist to navigate these rules.

Money talks, right?

None of AC/DC’s numbers are public, but let’s take a shot in the dark. The stadiums in Edmonton, Vancouver, Montreal, Toronto and Winnipeg have a combined capacity above 260,000. Assume the five dates run about 90 per cent sold — roughly 235,000 paid fans — an average ticket price of $180 would be close to $42.3 million in gross Canadian box office.

Top-tier legacy acts typically command 85 per cent to 90 per cent of net box office once facility fees and taxes are stripped out, which works out to roughly 60 per cent of gross; call it $25.4 million in Canadian-source performance income in this case.

Add merchandise, say, $25 a head and that’s roughly $5.9 million in gross sales, with perhaps 35 per cent of that, or $2.05 million, flowing back as royalty, thus forcing a 25 per cent withholding tax.

On that combined $27.45 million, Regulation 105 and the 25 per cent royalty withholding would pull more than $4.3 million before the tour bus leaves the country. That’s a whole lotta Rosie held by the CRA against a final tax bill that, once touring costs are deducted, is almost certainly a fraction of that.

The recovery requires a T1 or T2 return to be filed under Section 115 of the Income Tax Act, depending on who was paid. The 25 per cent royalty withholding is a different animal: that’s generally a final tax; there’s no return to file to get it back.

Because 15 per cent of gross revenue almost always exceeds a touring act’s real Canadian tax liability once expenses are counted, the system allows for certain waivers.

Since 2018, the CRA has offered a simplified process for non-resident artists and athletes earning no more than $15,000 in Canada annually, which is handy for a support act, but useless for AC/DC. Above that threshold, touring artists don’t get the easier path other non-resident service providers can use. Instead, they get thunderstruck.

Budget 2024 proposed giving the CRA legislative authority to issue a single waiver covering multiple transactions over a specified period, rather than engagement by engagement, which is precisely the high voltage a touring act needs.

That measure became law through Bill C-15 earlier this year, but the CRA hasn’t yet built the process to use it. Separately, the CRA ran its own consultation through summer 2025 and has said administrative improvements are coming this year.

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Angus Young and his advisers have long figured all of this out. But the mid-tier and emerging acts who don’t have a battalion of tax experts can often get shot down in flames by the compliance complexity. The rules aren’t unreasonable in principle — Canada has every right to tax income earned on its soil — but getting relief from over-withholding is disproportionately burdensome relative to the revenue at stake.

If Canada wants to be a more attractive stop on a global tour with its related economic benefits, the multi-transaction waiver authority in Bill C-15 is a real step forward . But it will only matter if the CRA implements it with fast turnaround times and clear, published criteria.

A touring act needs certainty measured in weeks, not months. In other words, the dirty deeds need to be done dirt cheap.

I’ll be keeping a stiff upper lip at the Vancouver show, trying to forget about Regulation 105 for two hours. Bill C-15 gave the CRA the amplifier. For those about to rock — and those about to withhold — we salute you.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

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