Non-Resident Withholding Taxes: Canadian Rental Property
The Canada Revenue Agency (CRA) requires that non-resident withholding taxes be paid on your monthly rental income via either one of the two methods summarized below.
“Gross Method”
25% of your gross monthly rental income must be remitted by the 15th day of the month following each month of rental to the CRA
These tax withholdings are remitted to a non-resident account at the CRA which is opened by the non-resident
under his/her name.
An NR4 slip detailing the annual gross income and non-resident tax withholdings are required by the non-resident from the CRA.
You may:
Do nothing further, or
Elect to file a Canadian non-resident rental tax return which allows you to apply the total remittances for the taxation year as an instalment payment against the tax payable on your net rental income for the year; and
You must:
File your non-resident rental tax return within two years after the end of the year in which you received the rental income for a refund of the excess tax remittances (or the return will not be accepted)
“Net Method”
If you wish to engage Trowbridge as your non-resident tax withholding agent, the following will be done:
Form NR6 will be prepared annually for each non-resident owner – “Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real Property” and after your review and signature, will be submitted to the CRA for approval on or before January 1st of each rental year or before the first payment is due for new rentals
Before the approval of the NR6 form, 25% of the monthly gross rental income will be remitted to the CRA and after the approval, 25% of the monthly net rental income will be remitted to the CRA for the rest of the taxation year
NR4 Summary and Supplementary for each non-resident owner will be prepared for each rental year and submitted to the CRA by March 31st of the following year
Canadian non-resident rental return for each non-resident owner will be prepared, after your review and signature will be submitted on your behalf to the CRA by June 30th of the following year as required under this method.
You must:
Submit a lump sum (as calculated by TPC) for the annual non-resident withholding tax to TPC’s third party provider as they will remit the required monthly non-resident withholding tax to the non-resident account opened by TPC with the CRA. Please note the entire lump sum amount will be submitted to the CRA on your behalf.
Review and sign (when required), tax documents sent to you regarding your Canadian rental property.
For more information please email us at: nrrentals@trowbridge.ca or call 416-214-7833.
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