Hi. I have several clients who are non residents with rental properties in Canada. Technically one should file an NR6 and withhold each month on the net rental and then file a 216 return at the end of the year. I have found that the NR6 and withholding takes so long, as well that CRA have often messed it up. We therefore no longer bother with the NR6 and any withholding. We just file the 216 return at the end of the year on the net rent. CRA charge a small amount of interest, perhaps for not sending in the monthly amounts. This is much easier and cheaper for the client.
Does anyone else do this?
Is there any risk to this? Why would anyone even bother with the withholding if this method works well?
Thanks!
Not my area of expertise but I believe the withholding obligation is on the tenant or, practically, on the Canadian resident property manager.
The solution to that is to send the NR6’s in about October for the following year. Then they are processed in time for Jan 1st usually. Most of my clients have NR6’s submitted because they are just breaking even on the rental for the most part so would owe little or no taxes and having to remit 25% upfront as collected is a major pain for them. What sort of mess ups have you seen? I have been filing S216 returns for 30 years and I don’t recall anything that could be considered a mess up by the CRA other than the odd NR6 that got lost in the mail so wasn’t approved.
The risk is that the CRA could get very steamed about not receiving any withholdings or NR6’s and charge lots of nasty penalties for not following the rules - ie that the property manager shall file an NR6 and/or make remittances as required. They don’t tend to get too upset if the client doesn’t owe anything or not very much on the S216 return but if there was a significant balance due I could see them charging late payment penalties on the payments that were supposed to be made and were not. 12 months times even a minimal penalty of $100/mth could get downright nasty quickly.
how much do you charge for the NR6 and 216 annual package?
I am up to $350 per year.