Non-residents are required to pay taxes in Canada on all Canadian sourced income. However, for non-residents they can skip paying taxes on that income since they no longer live in Canada. To counter that the CRA requires that for all payments that are made to non-residents 25% of the gross amount be withheld and remitted to the CRA and an NR4 slip be issued to the non-resident detailing the gross income earned and the tax withheld.
For non-residents earning rental income in Canada they are required to remit 25% of their gross rent monthly either themselves or using the services of an agent. An agent can be anyone who is a resident of Canada, if the non-resident fails to remit the required tax to the CRA the agent is held responsible for the remittance. If the individual chooses to make the 25% remittance themselves then they are required to register for an NR number with Part 13 withholding and make a remittance of 25% of the gross rent. Before March 31st, of the following year the Non-resident is required to send the CRA details of the rent collected and the tax paid and ask the CRA to issue an NR4. If the non-resident’s agent has more than 1 account that they make the remittance for then the agent themselves can issue an NR4 rather asking the CRA to issue it.
Withholding 25% of gross rent creates cash flow issues for individuals the CRA allows non-residents to apply for an NR6 waiver which allows the non-resident to make remittance on 25% of net income rather then gross income. For the tax remitted on the NR6 an individual must also apply for an NR4.
The filing deadline for individuals who have an approved NR6 the filing deadline is June 30th of the following year whereas individuals who do not have an approved NR6 the filing deadline is 2 years from the end of the year in which the rent was collected.
Disclaimer
The information provided on this page is intended to provide general information.
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