A non resident sold a Canadian rental property, paid the taxes on the capital gains, but never declared the income therefore no tax was withheld from the rental over the years. The client came to me after he was audited, assessed, and paid what the CRA requested which was the 25% of the gross rental income plus interest (penalties were waived). He’s now clear with the CRA but asking if, since this was his only Canadian income, he can file taxes for these years (2012 to 2017) to get some or all of his money back.
Any views and/or suggestions on the subject would be greatly appreciated.
I think those returns have to be filed within two years. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4144/income-tax-guide-electing-under-section-216-2016.html#P122_8105
I think that two-year deadline is to file the S216 return instead of going through the NR6 process. I would go ahead and file the tax returns for 2012 to 2017.
He can’t get any of it back except on the 2017 year. Returns have to be filed by the end of June the second year (i.e. June 2018 for the 2016 tax year) in order to be able to deduct any expenses. He does not need to file any returns except 2017 - the 25% tax paid on audit is the extent of his requirements for the earlier years. Unfortunate but the CRA is firm on this matter. I have had one or two clients run afoul of these rules.
You’re talking about the S216 return that reports rental income. A tax return filed by a non-resident to recover excess withholding tax on the sale of real property is not the same tax return and is not subject to the same restrictions.
I guess I should clarify which tax return the OP is talking about. I assumed it was the one reporting the gain but he may be talking about the S216 return, the comments from @laurie I agree with.
Thank you all for your input. I tend to agree with Kevin that the restrictions refer to Section 216 which is not the case here. I think the only possible way to try and get anything back is by filing a NR return reporting the income as it was assessed and claiming the payment as credit. To clarify, the assessments for the 6 years were sent on May 2018 and included the payments submitted. Any other views?
You can try to get some taxes back on the 2017 S115 return reporting the gain and the 2017 S216 return reporting rental income. Nothing will be refundable on the earlier S216 returns as you are past the deadline. Nonresident rental income must be reported on a S216 return so I am not clear on what hwr means by “which is not the case here”.