Non-resident tax on rental income

If you are a non-resident and receive rental income from real property in Canada, a non-resident tax at rate of 25% on the gross rental income has to be withheld and remitted to the Canada Revenue Agency (CRA).

Non-resident tax has to be withheld

The tax has to be sent to the CRA on or before 15th day of the month following the month the rental income is paid to you. Normally, you could ask your tenant or property manager to remit the tax on your behalf. At the end of year, an NR4 return, Non-Resident Tax Withholding, Remitting, and Reporting, has to be sent to the CRA. The NR4 return shows the total rental income and the amount of non-resident tax withheld.

Tax an be saved by filing a section 216 return

The non-resident tax withheld is considered your final tax obligation to Canada on the rental income. However, you can elect under section 216 to pay tax on net rental income instead of gross rental income. Tax can be saved if your net rental income is lower than gross rental income. But you have to file a section 216 return (Form T1159) to get a refund of the excess tax withheld. The election has to be filed by the due date to be valid. If need help, we provides tax filing services for non-resident owners of Canadian rental properties

Elect to have tax withheld on net rental income instead of on the gross amount

Alternatively, you can elect to have tax withheld on the net rental income instead of on the gross amount by sending the CRA Form NR6, Undertaking to File an Income Tax Return by a Non-resident Receiving Rent from Real Property or Receiving a Timber Royalty.  In this case, you must file a section 216 return by due date.

NR4 - withholding tax on rental income received by a non-resident 

Additional information