Filing and reporting requirements
When you receive rental income from real or immovable property in Canada, the payer, such as the tenant, or agent, such as the property manager, has to withhold non-resident tax at the rate of 25% on the gross rental income paid or credited to you. The payer has to pay the tax to the Canada Revenue Agency (CRA) on or before the 15th day of the month following the month the rental income is paid or credited to you.
The payer has to give you two copies of an NR4, Statement of Amounts Paid or Credited to Non-Residents of Canada showing the gross amount of rental income paid or credited to you during the year and the amount of non-resident tax withheld. The payer also has to send to the CRA an NR4 information return, as explained in Guide T4061, NR4 - Non-Resident Tax Withholding, Remitting, and Reporting.
Generally, the non-resident tax withheld is considered your final tax obligation to Canada on the rental income from real or immovable property in Canada. However, if you elect under section 216 of the Income Tax Act, you are choosing to report your rental income from real or immovable property in Canada on a separate Canadian tax return. This allows you to pay tax on your net Canadian-sourced rental income instead of the gross amount and you may pay less tax. You may also receive a refund of some or all of the non-resident tax withheld. For more information, see Guide T4144, Income Tax Guide for Electing Under Section 216.
If you intend to elect under section 216, you may also want to consider having non-resident tax withheld on the net rental income instead of the gross amount. To do this, you and your agent (a resident of Canada who acts on your behalf regarding your Canadian rental income) 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 CRA for approval. You should send to the CRA Form NR6 on or before January 1st of each year, or before the first rental payment is due.
If the CRA approves your Form NR6, your agent can withhold non-resident tax at the rate of 25% on your net rental income (the amount of rental income available after the rental expenses have been paid). Your agent must pay to the CRA the tax on or before the 15th day of the month following the month the rental income is paid or credited to you. For more information see Guide T4144.
Generally, you have to send to the CRA your section 216 return within two years from the end of the year in which the rental income was paid or credited to you. If CRA approves your Form NR6 for a certain year, you have to file a T1159, Income Tax Return for Electing Under Section 216, for that year, even if you have no tax payable or you are not expecting a refund. The return is due on or before June 30, of the following year. If you have rental income from more than one rental property in Canada and you make an election under section 216, all of your Canadian rental income and expenses must be reported together on one section 216 return. For more information on the section 216 return filing due date, see Guide T4144.
Forms and publications
- Guide T4144, Income Tax Guide for Electing Under Section 216
- 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
- Form T1159, Income Tax Return for Electing Under Section 216
- IC72-17, Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada - Section 116
- IC77-16, Non-Resident Income Tax
- IT-393, Election Re: Tax on Rents and Timber Royalties Non-Residents
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