Compliance and planning for non-residents earning rental income or selling property in Canada.
We work with non-residents in two common situations: earning rental income from a property you own in Canada, or selling Canadian real estate. In both cases, the CRA treats you differently than a Canadian resident, with withholding tax rules that apply automatically unless you take the right steps in advance.
By default, anyone paying rent to a non-resident landlord — usually a property manager or tenant — must withhold 25% of the gross rent and remit it to the CRA on your behalf, reported to you each year on an NR4 slip. That withholding applies before any expenses are deducted, which often means paying far more tax than necessary.
Most non-resident rental clients move through the same three stages.
Tax is withheld at 25% of gross rent and reported on an NR4 slip — this happens automatically, whether or not you file anything further.
By filing a Section 216 return, you can deduct expenses and capital cost allowance so you are taxed on net income instead — often resulting in a meaningful refund of what was withheld.
Once approved by the CRA, an NR6 lets the payer withhold tax on net rental income monthly instead of gross — improving your cash flow all year instead of waiting for a refund.
When you sell Canadian real estate as a non-resident, the buyer is generally required to withhold tax on the sale under Section 116 of the Income Tax Act. Without advance planning, that withholding applies to the full gross sale price — not just your gain — which can tie up far more cash than the transaction actually owes in tax.
Most non-resident property sales move through the same three stages.
Applying for a Section 116 clearance certificate before closing limits withholding to tax on your estimated gain, instead of the full sale price.
Without a certificate in place, the buyer must withhold and remit a significant portion of the gross proceeds to CRA — funds you would otherwise have access to at closing.
After closing, we file the return reporting your gain, reconciling it against the amount withheld — often recovering funds beyond what the clearance certificate already addressed.
We handle these filings from start to finish — preparing Section 216 rental returns and NR6 elections, or applying for a Section 116 clearance certificate before you sell — so you are taxed fairly on Canadian rental income or property sales without the guesswork.
