Subsection 216(1) Late-filing Policy

What is the subsection 216(1) late-filing policy?

This policy allows you to file a subsection 216(1) income tax return late if you are a non-resident to whom subsection 216(1) of the Income Tax Act applies.

We will not accept under this policy the late filed 216 income tax return if:

  • we have already advised you of your responsibilities under Part XIII of the Act with respect to rental income or timber royalties earned in Canada; or
  • we have already initiated action because of your failure to comply with Part XIII
  • you have submitted and we approved -- Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent From Real Property or Receiving a Timber Royalty.


An extension to file a subsection 216 (4) income tax return could be approved when extraordinary circumstances exists. (Subsection220(3)).

What is the purpose of the policy?

This policy will give non-residents eligible under subsection 216(1) one chance to come forward and correct withholding and filing deficiencies under Part XIII.

Although we will not apply penalties, we may charge arrears interest for any failure to deduct and remit tax under Part XIII and for any outstanding Part I tax liability.

What are the normal withholding and filing requirements?

Non-residents are required to pay income tax of 25% on amounts they receive as rental income on real property in Canada or as timber royalties earned in Canada.

The 25% tax is usually considered the final tax liability. However, a non-resident can elect to pay tax on the net income instead of the gross income by filing an income tax return under section 216. In most cases, the tax payable on an income tax return filed under section 216 is less than the tax withheld on the gross rental income.

You have to file the section 216 return:

  • within two years of the end of the tax year; (subsection 216(1)) or
  • six months from the end of the tax year if you have submitted -- and we approved -- Form NR6. (subsection 216(4))

Need more information?

For more information about the Subsection 216(1) Late-filing Policy, contact the International and Ottawa Tax Services Office.

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