Non-Resident Landlord Tax in Canada: Rental Income, NR6 & Section 216

Estimated reading time: 7 minutes

Canadian rental-property owners who live outside Canada can have different tax obligations from resident landlords.

The rules affect how rental income is withheld and remitted to the Canada Revenue Agency, what information an agent or property manager must report, and whether the owner chooses to file a Canadian tax return under Section 216.

Two concepts are particularly important: the standard 25% non-resident withholding requirement and Form NR6, which can allow approved withholding to be based on estimated net rental income rather than gross rent.

This guide explains the general framework for non-resident owners of Canadian rental property. Individual circumstances can vary, so owners should obtain tax advice where appropriate.

What Does “Non-Resident” Mean for Canadian Tax Purposes?

Canadian tax residency is not determined simply by citizenship, immigration status, or whether someone spends more or less than 183 days in Canada.

The Canada Revenue Agency considers a person's residential ties and individual circumstances.

Significant residential ties can include:

• A home in Canada.
• A spouse or common-law partner in Canada.
• Dependants in Canada.

The CRA may also consider secondary residential, economic, and social ties as well as applicable tax treaties.

The 183-day rule is relevant in some residency situations, but it should not be used as the sole test for determining whether someone is a non-resident.

Form NR73

Someone leaving Canada who needs help determining their Canadian tax residency can submit Form NR73, Determination of Residency Status (Leaving Canada) .

The CRA can then provide its opinion regarding the person's residency status based on the information submitted.

Because tax residency can have consequences beyond rental income, owners who are uncertain about their status should address that question before relying on the non-resident rental-income rules.

How Non-Resident Rental Income Is Taxed

The standard rule is that non-resident tax of 25% of gross Canadian rental income must be withheld and remitted to the CRA.

The payer or Canadian agent handling the rental income is responsible for the applicable withholding and remittance.

The CRA has specifically clarified that ordinary Canadian residential renters are not expected to determine whether their landlord is a non-resident or routinely withhold 25% from their residential rent.

For a professionally managed rental, a Canadian property manager acting for a non-resident owner may serve as the Canadian agent and handle the applicable withholding and reporting process.

When Is the Tax Remitted?

Non-resident withholding tax is generally remitted to the CRA on or before the 15th day of the month following the month in which the rental income was paid or credited to the non-resident.

The agent also has annual reporting obligations, including preparation of the applicable NR4 information return and slips.

Gross Rental Income vs. Net Rental Income

Without an approved NR6, the standard withholding is based on gross rent.

For example, if a non-resident landlord receives $3,000 per month in rent, standard withholding is based on that $3,000 amount rather than the owner's profit after expenses.

This can create a significant cash-flow difference for properties with mortgage interest, condominium fees, property taxes, insurance, repairs, management costs, or other eligible rental expenses.

What Is Form NR6?

Form NR6 is an undertaking completed by the non-resident owner and a Canadian agent.

It allows them to ask the CRA for approval to withhold non-resident tax based on the property's estimated net rental income rather than gross rental income.

Once the CRA approves the NR6, the agent may generally withhold 25% of the estimated net rental income.

The agent must continue withholding on gross rental income until the CRA approves the NR6 in writing.

Our NR6 guide for non-resident landlords explains this process in more detail.

When Should Form NR6 Be Submitted?

The CRA recommends sending Form NR6 on or before January 1 of each year or before the first rental payment of the year is due.

Because CRA approval is required before withholding can switch to the net-income basis, owners and their agents generally benefit from preparing the application before the beginning of the rental year.

What Happens After an NR6 Is Approved?

NR6 approval changes the basis used for monthly withholding. It does not eliminate the owner's Canadian tax-filing obligation associated with the undertaking.

The non-resident owner must file a Section 216 return reporting the Canadian rental income and eligible expenses.

If an NR6 was approved for the year, the Section 216 return must generally be filed by June 30 of the following year.

For example, an owner with an approved NR6 for the 2026 rental year would generally need to file the related Section 216 return by June 30, 2027.

What Is a Section 216 Return?

Section 216 of Canada's Income Tax Act allows a non-resident receiving Canadian rental income to elect to file a Canadian tax return that reports the rental income and eligible rental expenses.

Instead of treating the 25% withholding on gross rent as the final tax, the Section 216 calculation determines tax based on the owner's rental-income position under the applicable rules.

Depending on the property's income and expenses, this may result in a refund of some of the tax that was withheld.

If No NR6 Was Filed

A non-resident owner can still choose to make a Section 216 election even if tax was withheld on gross rent throughout the year.

In that situation, the CRA generally allows the Section 216 return to be filed within two years from the end of the year in which the rental income was paid or credited.

Different deadlines can apply in particular circumstances, including situations involving a recapture of capital cost allowance, so owners should confirm the filing deadline that applies to their return.

NR4 Reporting

The Canadian agent or payer responsible for the non-resident withholding also has reporting obligations.

The owner should receive NR4 slips showing:

• The gross rental income paid or credited during the year.
• The amount of non-resident tax withheld.

These records are important when the owner prepares the Section 216 return.

Why Non-Resident Property Management Is Different

A landlord living outside Canada still needs local systems for the property itself.

Those responsibilities can include:

• Tenant screening and leasing.
• Rent collection.
• Maintenance and emergency response.
• Property inspections.
• Tenant communication.
• Canadian rental-income withholding.
• NR4 reporting.
• NR6 administration where the owner chooses that process.
• Documentation required for the owner's accountant or tax professional.

This is why Property Management for non-resident landlords involves more than simply managing the tenant.

The local agent becomes part of the administrative structure connecting the property, rental income, tenant, contractors, owner, and Canadian tax reporting.

Keep Tax and Property Records Organized

Non-resident owners should maintain clear records throughout the year rather than attempting to reconstruct rental-property finances at tax time.

Relevant documents can include:

• Monthly rental statements.
• NR4 slips.
• NR6 approval correspondence.
• Property tax records.
• Insurance costs.
• Management fees.
• Repair and maintenance invoices.
• Condominium expenses where applicable.
• Other documentation relating to rental income and eligible expenses.

A landlord client portal can make property records and statements easier to access from outside Canada.

Key Takeaways for Non-Resident Landlords

• Canadian tax residency is based on more than a simple 183-day test.
• The standard non-resident rental withholding rate is generally 25% of gross rental income.
• Ordinary residential tenants are not expected by the CRA to determine their landlord's residency status or routinely administer this withholding themselves.
• A Canadian agent can handle withholding and remittance for the non-resident owner.
• An approved NR6 can allow withholding based on estimated net rental income.
• The agent must continue withholding on gross rent until CRA approval is received.
• An owner with an approved NR6 must generally file the related Section 216 return by June 30 of the following year.
• Owners without an NR6 may still choose to file under Section 216, subject to the applicable filing deadline.

Because non-resident taxation depends on the owner's individual circumstances, this guide should be treated as a general overview rather than personal tax advice.