If you own rental properties in Canada, non-resident tax has to be withheld and remitted monthly to the Canada Revenue Agency at the rate of 25% on the gross rental income. The non-resident tax withheld is considered your final tax obligation to Canada on the rental income. 25% on gross rent is way too high considering that, very often, there is no or little profit to show after all kinds of expenses. Fortunately, you can elect to file under section 216 to pay tax on net rental income instead of gross rental income and get a refund of the excess tax withheld. But don’t wait too long. You have to file within two years.
There is an alternative way to pay the monthly withholding taxes. You can file Form NR6 to request tax be withheld on 25% of estimated net rental income instead on gross rental income. And you are required to file section 216 return to report your rental activities each year otherwise penalty will be applied.
You can see Section 216 return should be filed either case.
We have been helping many non-residents with their tax compliance since 2002. Leave the hassle of tax filing to us, and we will give you peach of mind and tax savings. Contact us today.