What You Need to Know About Non-Resident Taxes For Owners of Rental Properties in Canada

Owning rental property in Ontario but living outside Canada comes with unique tax rules. Canada’s Income Tax Act imposes strict reporting and withholding obligations on non-resident owners. You need to understand your duties, deadlines, and options to avoid penalties and protect your returns.

Who Counts as a “Non-Resident”?

Non-resident status is not just about where you live today. The Canada Revenue Agency (CRA) looks at:

• Primary ties: where your home, spouse, or dependents are located. 
• Secondary ties: such as health card, driver’s licence, and bank accounts. 

If you don’t maintain significant ties in Canada—or if you reside here for fewer than 183 days a year—you are generally considered a non-resident for tax purposes.

Rule #1: 25% Withholding on Gross Rental Income (Part XIII Tax)

By default, whoever pays your rent—either your tenant or a Canadian agent (like a property manager)—must withhold 25% of your gross rental income each month and send it to CRA by the 15th day of the following month.

That remittance counts as CRA’s collection of your tax. In this case, you typically do not need to file a Canadian income tax return.

Each year, you will also receive an NR4 slip that shows the rental income received and the tax withheld. Your agent must file the NR4 information return with CRA by March 31.

Failing to remit on time leads to daily compound interest charges and penalties. Both you and the payer (tenant or agent) are jointly liable for the amounts owing.

Rule #2: Elect Section 216 to File a Return & Claim Expenses

You can choose to be taxed on your net rental income instead of gross. This option allows you to deduct expenses such as:

• Repairs and maintenance 
• Mortgage interest 
• Property taxes 
• Insurance 
• Management fees 

To use this option:

1. File Form NR6 before January 1 of the rental year, or before the first rent payment is due. 
2. Include an estimate of your expected net rental income. 
3. Once CRA approves the NR6, your agent can withhold 25% of the net income instead of gross. 
4. At year-end, you must file a Section 216 tax return (Form T1159) by June 30 of the following year. 

This approach often reduces the tax payable. If too much was withheld, CRA will refund the difference after processing your return.

Warning: If you miss the June 30 deadline, your NR6 election is void. CRA will assess tax on your gross rent, even if you were withholding based on net.

Deadlines at a Glance

Form / Action	Deadline
Monthly withholding remit	15th of the month following rent payment
NR4 slip & return filing	March 31 of the following year
NR6 filing	Before Jan 1 of the year or first payment
Section 216 return filing	June 30 of the following year

Penalties and Risks

• 10% penalty plus interest applies if withholding is late. 
• Missing the Section 216 return deadline cancels your NR6 election, and you will be taxed on gross rental income with no deductions. 
• Both you and your agent or tenant may be held liable for missed or incorrect remittances. 

Why Using a Canadian Agent Matters

When filing an NR6, you must name a Canadian agent. That agent is responsible for:

• Withholding and remitting taxes correctly. 
• Filing NR4 slips and the annual information return. 
• Managing Section 216 returns and deadlines.
  

At Visture, we regularly act as this Canadian agent. We ensure compliance, protect your cash flow, and handle the administration so you can focus on your investment.

Key Takeaways

• Non-resident landlords must pay 25% tax on gross rent unless they file an NR6. 
• Filing an NR6 allows tax to be withheld on net income instead. 
• Section 216 returns must be filed by June 30 to claim expenses and confirm your election. 
• Penalties and interest are strict for missed deadlines or late remittances. 
• A trusted Canadian agent makes compliance easier and avoids costly mistakes. 

Final Word from Visture

Non-resident rental ownership in Ontario is rewarding but complex. Taxes are non-negotiable, and CRA does not show leniency for missed filings. By understanding the rules—and working with experienced professionals—you protect your investment, reduce risk, and keep more of your rental income.