Rental income for non-residents – Canadian agent procedure (NR6)
we have left Canada but kept a property that we rent to gain a little bit of income.
We heard about the Canadian agent procedure (NR6) that allows us to pay the 25% withholding on the net profit instead of the gross rent.
Ca you help us?
Hello Ms XXX,
About your request, we do not offer that specific service but we have an alternative to offer.
Few accounting firms will offer to be your Canadian agent because it involves a financial liability of the Canadian agent in case of default from the non-resident. For this reason, we do not offer this service.
Nevertheless, unless you have friends or family in Canada that could handle the Canadian agent procedure, most people use the gross withholding method, combined with an income tax return named “Section 216”. Instead of filling a lot of paperwork associated with the procedure with a Canadian agent (NR6 procedure), making monthly calculations to calculate the net income, etc., you instead pay a withholding of 25% of gross rents every 15th day following the month of the rent. At the end of the year, we submit a “Section 216” tax return and recover the excess payment.
This method has the following advantages:
– Much less paperwork
– The period for producing Section 216 is much longer and is less restrictive than the Canadian agent procedure (NR6)
– Less persons involved, less expenses payable to third parties
It has the disadvantage of having to make higher withholding throughout the year. Note that you recover any over-payment at the end of the year and pay in the end no more tax than the Canadian agent procedure.
The cash flow is different but the end result remains the same.
We can help you with this “gross withholding” procedure.
I remain available to discuss this matter in detail if you wish. I’m available via phone or Skype.
We will be happy to help you in any step related to your building rental in Canada.
Linked article : Tax obligations of non-residents who rent property
Linked article : Comment éviter la retenue de 25%?