Tenants 1440x600

Non-Resident Owner Information

Non-Resident Property Owners and Non-Resident Taxes

It’s not uncommon for Canadian property owners to live outside the country. At Residential Leasing Group, we understand the stress of leaving your Calgary property behind. There’s a lot to consider, including non-resident taxes.

With over 20 years of non-resident experience, we can guide you through the step-by-step process to help alleviate any issues that can sometimes draw the attention of tax authorities subjecting you to further scrutiny.

If you own a rental property in Calgary and are considered a non-resident of Canada, there are specific Canada Revenue Agency (CRA) rules and regulations that must be followed.

As a non-resident of Canada, you are required to pay tax on income you receive from sources in Canada. The type of tax you pay and the requirements to file an income tax return depends on the type of income you receive. The most common type of Canadian income subject to tax is rental income.

To determine if you are a non-resident for tax purposes

In most situations, you are deemed a non-resident for tax purposes if you:

  • Normally, customarily or routinely live in another country and are not considered a resident of Canada; or
  • Do not have significant residential ties in Canada; and
  • You live outside Canada throughout the tax year; or
  • You stayed in Canada for less than 183 days in the tax year.

 

To calculate the number of days you stayed in Canada, include each day or part of a day that you stayed in Canada, including:

  • Days you attended a Canadian university or college;
  • Days you worked in Canada; and
  • Any days or weekends you spent on vacation in Canada.

For more information on determining your non-resident status, visit the CRA website.

Rental income and non-resident tax

If you are considered a non-resident of Canada, and you receive rental income from real or immovable property in Canada, Residential Leasing Group is required by law to remit 25% of your gross monthly rent to the CRA on or before the 15th day of the month following the month the rental income is paid or credited to you.

However, the required 25% remittance can be reduced by completing form NR6 (“Undertaking To File An Income Tax Return By a Non-Resident Receiving Rent From A Real Property Or A Timber Royalty”.) By completing the NR6 form, you can elect to have tax withheld on your net rental income rather than the gross monthly rent.

RLG requires each of our property owners to complete the first three sections of the NR6 form, listed below:

Section 1

Your mailing address – This is your mailing address outside of Canada

Your Social Insurance Number or Individual Tax Number- If you do not have a Canadian Social Insurance Number, we can provide an application form to obtain an Individual Tax Number.

Your date of birth

Section 2

Rental Property Address – list only your rental properties managed by RLG

Estimated Gross Rental Revenue for the tax season for each

Note: the rent may fluctuate but an estimation of the total gross rental revenue for the tax season is required.

Section 3

Sign and Date the Undertaking By Non-Resident Section.

We also require you to provide an annual list of estimated allowable expenses. We will provide you with an allowable estimate expense sheet on which you can list the expenses you expect to incur for the taxation year.

NR6 Commonly Asked Questions:

It is a “tax option” as to whether one or more parties would like to complete an NR6. If you are unsure, speak with your international tax accountant. Your tax accountant would be privy to your tax situation and able to provide you with the best course of action to suit your tax needs.
No. Since RLG is not the acting agent for your additional rental properties, please do not add these on your completed NR6.
Yes, please ensure that your yearly estimated totals for both your revenues and expenses are split 50/50.
Please ask your international tax accountant, as there are some specific rules on travel deductions depending on individual situations.
No. RLG must remain at an arm’s length as we can only act as your agent.
After the CRA approves your NR6, RLG can withhold non-resident tax at the rate of 25% on your net rental income. (That is the amount of rental income available after the rental expenses have been paid.)
If you elect to complete an NR6 and the CRA approves it, you have agreed to file a Section 216. Even if you determine there will be no tax payable to the CRA, you are still obligated to file a Section 216.
As a non-resident of Canada, you can choose to send the CRA separate Canadian tax returns to report your rental income from real or immovable property in Canada. Choosing to send the CRA this return is called electing under Section 216 of the Income Tax Act.
If you have rental income from more than one rental property in Canada and you make an election under Section 216, all your Canadian rental income and expenses must be reported together on one section 216 return.

Your Section 216 return must be received by the CRA on or before June 30 of the current tax year. If you have a balance owing to the CRA, you should file your Section 216 and pay it on or before April 30. If you are late with your payment, the CRA will charge interest on the balance owing starting on May 1.

If you have a net rental loss, you still must file your Section 216 return by the due date.
When the due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, the CRA considers your return to be filed on time if they receive it or it is postmarked on the next business day.

No. Since RLG is not the acting agent for your additional rental properties, please do not add these on your completed NR6.

If the CRA approves your NR6 form for the year and you do not file your Section 216 return by the due date, you will be subject to non-resident tax on your gross rental income. The CRA will issue a non-resident tax assessment to RLG who will then pass it on to you for reimbursement.

Example:
Emily, a resident of Australia, rents out a property she owns in Canada. Before January 1, 2013, Emily and her agent completed Form NR6 sent it to RLG, and we approved it.
For 2017, she received rental income and had rental expenses as follows:
Gross rental income – $20,000
Allowable expenses – $15,000
Net rental income – $5,000

Because the CRA approved Form NR6, RLG could withhold and remit non-resident tax for 2017 on the net rental income (25% of $5,000) rather than on the gross rental income (25% of $20,000).

Emily must file a Section 216 return on or before June 30, 2018. If she does not send the return by the due date, RLG must pay on Emily’s account an additional $3,750, plus interest. This $3,750 is the difference between the amount withheld on her net rental income (25% of $5,000 = $1,250) and the amount Emily would have to pay on her gross rental income (25% of $20,000 = $5,000) if she had not filed Form NR6.

Gather all the documents you need to complete your Section 216 return. This includes any NR4 slips that have information about your rental income, and receipts for any rental expenses or deductions you plan to claim.

Include one copy of your NR4 slips that show the amount of rental income and non-resident tax withheld. If you claim a credit for the non-resident tax withheld without including the NR4 slip, the CRA may disallow your claim. This could also delay the processing of your return.
Please keep a copy of all receipts relating to your return for your records.

An NR4 is a statement of amounts paid or credited to non-residents of Canada.
At the end of each year, RLG completes an NR4 slip for every non-resident of Canada paid or credited amounts that are subject to withholding tax according to the Income Tax Act.
RLG will provide you with two copies of an NR4 slip showing the gross amount of rental income paid or credited to you during the year, and the amount of non-resident tax withheld each year. Your NR4 slips are emailed between and January 15 and February 15 each year.
Send your return to the CRA via courier or registered mail to:
International Tax Services Office
Post Office Box 9769, Station T
Ottawa ON K1G 3Y4
CANADAPlease ensure you keep your proof of filing and all tax documents for a minimum of five years. In the event of a misplaced return or an assessment, the CRA will require documented proof that your return was sent on or before June 30.
When the CRA receives your return, they usually review it based on the information you provided and send you a notice of assessment in the mail. However, they may select your return for a more detailed review before they assess it.If you have not received your notice of assessment from the CRA International Office within three months of filing, it would be beneficial to follow up with them as they may require additional information and you will avoid being assessed based on your gross income.


While RLG is very knowledgeable in helping our property owners navigate the non-resident tax process, we strongly recommend that you also engage an accountant, preferably one that is well-versed with non-resident taxation. If you do not have an international tax accounting firm for all of your non-resident taxation requirements, RLG is pleased to recommend Compass Tax or The Expatriate Group.

If you have additional questions about non-resident tax, please don’t hesitate to contact us.