Non-resident tax on rental income

My client recently became a non-resident and is renting out his home in Canada. I explained to him that he will need to remit 25% of the gross rental income each month under Part XIII of the Income Tax Act and I will file a s216 return to get most of that tax back. He is not using a property manager or an agent but just collecting funds directly from the tenant.

I am wondering if an NR6 election is applicable here. The form indicates that “Your agent must be a resident of Canada to whom the rental payments are paid or credited on your behalf when this form is signed”. Is the tenant considered the agent in this case?

I appreciate your guidance. Thank you!

The tenant would have to be foolish if he would accept that responsibility and liability of actually being appointed “agent”.

The payer (tenant in this case) "has to withhold non-resident tax of 25% on the gross rental income paid or credited. The payer has to pay the tax on or before the 15th day of the month after the month the rental income is paid or credited."
“You should discuss this obligation with your payer to make sure they withheld and remit the correct amount of non-resident tax to the CRA on your behalf. If the payer does not withhold and remit this non-resident tax, the CRA will charge compound daily interest on the amount not withheld and remitted. The CRA may also charge a penalty.”

Sounds like it might already be several months in arrears.

If the property owner wishes to consider the NR6 procedure, he is WAY WAY WAY too late for the 2021 tax year.

(RE Capital: presumably the client reported the tax disposition of the property and thus has records of the acquisition cost of the now rental income producing property for the future capital disposition reporting.)

Thanks for your response Joe. He just left the country a few weeks ago and the NR6 states the deadline is “on or before the first day of each tax year, or when the first rental payment is due”. As my client is collecting rents directly from the tenant, is it the tenant’s responsibility to remit the tax, or my client? And if penalty/interest is charged, would it be charged to the tenant or my client? As the tenant is not a client of mine, how would I ensure the non-resident tax is being remitted on time?

As for the dispositions on departure, that will be declared on his final T1, along with a 45(2) election to defer to the deemed disposition on change of use.


It is the property manager’s responsibility to remit the taxes which is usually the client, a trusted relative/friend of the client or a third party property manager. It can be the accountant - you - but I wouldn’t recommend it due to being on the hook for tax payments if the client doesn’t make the required remittances. It is supposed to be the person who is actually collecting the rent and has a Canadian mailing address. Penalties/interest are the responsibility of the property manager (which why no tenant in his right mind would take this on) and also making sure the returns are filed on time. I’d file the NR6 now for 2021 and 2022. You should get a response in 6 weeks or so and then not have to remit the taxes for say Oct 2021 onwards. Make darned sure the S216’s are not late (June 30th - 6 months after year end) as if they are then the expenses are all disallowed and the tax is a flat 25% of the rent collected. NR6’s should typically by filed by Nov 1st each year to ensure they come back in time for January 1st.

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Thank you so much @laurie ! This is extremely helpful!

On the NR6 form, who would sign in the agent section? The form states that the agent must be resident of Canada. If/when the NR6 is approved, is there still a requirement to remit on the net rental income monthly? This would be difficult as some expenses are annual and maintenance can be hard to predict.

The person taking responsibility for the tax payments should be the agent. If it’s the taxpayer, use a mailing address for a relative or you. The approval letter will tell you how much to remit - it’s based on the projected income statement you submitted and is the same every month.

Oh I see thanks! As you indicated above, it would not be wise to put myself as the agent. But could it be the non-resident taxpayer’s name & signature with my address? The property is jointly owned with his wife so would I need to file two separate NR6 forms?

There is a very good reason why CRA requires that an agent be resident in Canada.
They want to be in a position to SUCCESSFULLY sue for unpaid taxes.

Any steps you might take to circumvent or frustrate the path that CRA would take to SUCCESFULLY SUE against the taxpayers would put you directly in their line of fire.

Clearly the “non-resident” taxpayer is NOT “resident” in Canada.

Also, there are TWO taxpayers, TWO owners, and each has their own tax responsibilities.

If I were you, if you don’t have this all properly locked up and are not that familiar with it, I would make very sure that client checks that the WHOLE 25% of gross rents is actually going to CRA each and every month.
Then at least CRA is covered.
If the taxpayers (both) later then end up properly establishing a Part I filing and liability in lieu, deal with that at that time. (You would not need a NR6 in that case).

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Joe is very much correct on this whole thing - your client CANNOT be the agent. He would be best served by hiring an agent. Most can be had foe 10% of monthly rents, so it’s not a huge expense (and is fully tax deductible)

As to your comment of filing a “final T1” your client has significant ties to Canada by virtue of this property (and most likely a bank account to go with it) so is not a full fledged non-resident, is earning income in Canada, and will most likely be required to file here each year. Your client needs to find a qualified Canadian tax accountant asap to make certain they follow all the rules and don’t put themselves (or you) in the firing sights of the CRA.

I thought the 45(2) requires the individual to be a Canadian resident for that to apply.

If the client has not retained other significant residential ties to Canada, he is in all likelihood a non- resident as of the date of his exit from Canada. Ownership of a rental property/ bank account does not in and of itself mean that he will continue to be considered to be a Canadian resident. I have a few clients in exactly this position. The above advice for the client to engage the services of a Canadian property manager is good advice. The tenant could be required to withhold the tax in the absence of anyone else. See below for a link to the CRA info on this- Filing and reporting requirements -


Not exactly correct Laurie.

(And also my first post might have given the ambiguous impression that the tenant could opt-out of responsibility)

ITA S215(1) places primary responsibility to withhold and remit on the payor (ie tenant). S215(2) then goes on to describe where there is an Agent or other person.
S215(6) goes on to hold the person (tenant or agent or other person) responsible for the tax if they have "..failed to deduct or withhold any amount as required by this section from an amount paid or credited or deemed to have been paid or credited to a non-resident person"

Hi Joe,
Isn’t it that when one becomes Non- resident for Tax purposes then the rental income which he/she earns during these periods only under Section 216 of the Income Tax Ordinance an information Return T1159 is required to be filled. (Tax to be paid on the net Canadian-source rental income).

" Isn’t it that when one becomes Non- resident for Tax purposes then the rental income which he/she earns during these periods only under Section 216 of the Income Tax"


when one becomes Non- resident for Tax purposes then the rental income which he/she earns during these periods Tax is payable under S212(1)(d).

This is not Part I tax, but rather Part XIII tax.

As alluded to above, people can get into seriously large tax liability and other consequences if they decide to just “wing it” instead of hiring a professional accountant familiar with the Law to advise them when earning business or property income.

S216 provides an elective provision.