What is a section 216 election for a non-resident who owns Canadian rental property?

A section 216 election lets a non-resident who owns Canadian rental property choose to be taxed on the net rental income, rent minus allowable expenses, at graduated Canadian rates, instead of simply having tax withheld on the gross rent as it's paid. Without the election, the person paying you rent, or your property manager, is generally required to withhold and remit a flat tax on the full rent collected, with no deduction for expenses like maintenance, property management, mortgage interest, or municipal taxes.

Because that withholding is calculated on gross rent, it can significantly overstate what you'd actually owe once real expenses are factored in, particularly for a property with a mortgage or significant carrying costs. Electing under section 216 means filing a Canadian return reporting the rental income and expenses much like a resident landlord would, and the tax is calculated on the resulting net amount.

For most non-resident landlords with genuine expenses against their Canadian rental income, this election results in materially lower tax than simply accepting the withholding, which is why it's one of the more commonly used elections available to non-resident property owners, though it does mean engaging with the Canadian tax filing system from abroad.