You may benefit from electing to file a return under section 216 if the non-resident tax withheld during the year is more than the amount of tax payable on your section 216 return.
You want to receive a refund after the end of the year
Electing under section 216 allows you to pay tax on your net Canadian-source rental income or timber royalty income instead of the gross amount.
To make this election, complete Form T1159, Income Tax Return for Electing under Section 216 and file it within two years from the end of the year that the rental income or timber royalty income was paid or credited to you.
For more details, go to How to complete your return.
You want to pay less tax each month
You can elect to have tax withheld during the year on your net rental income or timber royalty income instead of the gross amount.
To make this election, you (or each non-resident who is a member of a partnership) and your agent have to complete Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property or Receiving a Timber Royalty, and send it to the Canada Revenue Agency (CRA) for approval on or before January 1 of each year or before the first rental payment is due.
Your agent must continue to withhold non-resident tax on the gross rental income or timber royalty income until the CRA approves your Form NR6 in writing. If the CRA approves your Form NR6, you must file a section 216 return on or before June 30th of the following year.
If your Form NR6 is approved by the CRA
If you sent the CRA Form NR6 for 2025 and the CRA approved it, you must file your 2025 section 216 return on or before June 30th of the following year.
You must include the income and expenses from all of your Canadian rental properties in one section 216 return. You have to file a return even if you have no tax payable or are not expecting a refund.
If you do not fulfill your obligation, you will have to pay the full amount of non-resident tax, as well as applicable interest charges. The CRA calculates the required amount of tax at the statutory rate of 25% of the gross rental income or timber royalty income, minus the amount of tax already remitted for the year.
To get help with Form NR6 or enquire about the processing status, contact the Non-Resident Withholding Section.
If your Form NR6 was not approved
Your agent must continue to withhold non-resident tax on the gross rental income or timber royalty income until the end of the year. You may choose to file a section 216 return after the end of the year.
You do not want to file a return
If you do not elect under section 216, the withholding tax of 25% on your gross rental income or timber royalty income is considered your final tax obligation. You do not have to file a return.
If you sold your rental property
You must file a section 216 return if both of the following conditions apply:
- You previously claimed capital cost allowance (CCA) under section 216 for this property.
- You are including a recapture of CCA on your return.
To determine if you have a recapture of CCA, you may use Form T776, Statement of Real Estate Rentals to calculate the recapture of CCA. For instructions, go to Recaptured capital cost allowance.
If you must file, send your section 216 return and pay any balance owing by April 30 of the year following the sale, whether you completed Form NR6 or not.
If you have rental income from more than one rental property in Canada, you must report all of your Canadian rental income and expenses together in one section 216 return.
For more information on the special rules that apply when disposing of your Canadian rental property, go to:
