Tax obligations of non-residents who rent property

When a non-resident rents a property, it generates a series of complex procedures…
Here’s how to fulfill your obligations as a non-resident pursuant to section 216 (section 216 of the Income Tax Law).

Registration as a non-resident :

You must register for a non-resident account. This step is only necessary once. You can call ARC at 1-855-284-5947.

Send the payment of withholding to the government :

Unless you have an agent in Canada (different procedure, in this case, contacts us) you must then submit the checks representing 25% of gross rental income to the government. The check must be received by the Government before the 15th day of the month following the month rented.
One check for a couple is necessary because the number of non-resident account is joint.
Do not forget to specify the tax year on the check.
You can already prepare the checks; it will only remain to enter the number of non-resident account on the check as soon as we have got it for you. This procedure has to be done each year. We will automatically remind you trough email.

Send check to :
Revenue Canada
875 Heron Road,
Ottawa, Ontario, K1A 1B1

Request NR4 :

We’ll take care of it for you. This step has to be done each year. It takes about 20 minutes but follow-ups can be more complex and longer in some situations. It is an approximation.

Filing your tax return :

We will also need information on expenses that appear on our rental income questionnaire.
Note that this is an additional income tax return that is distinct from the one relating to the disposition of the building. It must be submitted separately.
Please fill our questionnaire and return it to us so we can include the correct expenses.
We will then prepare your tax returns and send them by email to you for approval.
After receiving your approval, we send your return.
This approach has to be done each year when there is a rental income.
At this step you recover the overpaid tax because withholdings are on gross rents while the final tax is on net rental income after expenses.

Certificates of disposition :

Finally, when the property is sold, a Certificates of Disposition for federal and provincial must be filed before the title transfer to prevent substantial withholdings on the selling proceeds from the notary on behalf of the government.
Let us know if you want to talk via Skype or phone because it is a fairly complex subject and it is important to understand the subtleties.

Rental income for non-residents - Canadian agent procedure (NR6) REER 2014 : Éléments de réflexions

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