Non-Resident Landlord Withholding Tax on Ontario Rent

If you own an Ontario rental property but live outside Canada, the rent is not simply deposited into your account untouched. Canadian rules require tax to be withheld from the rent, and the person who pays it has duties of their own.

This article explains the 25% withholding, how Form NR6 and a Section 216 return can change the outcome, and what tenants and property managers are expected to do.

The 25% withholding rule

The payer or agent, such as a property manager, must withhold non-resident tax of 25% on the gross rent paid or credited to a non-resident for Canadian real property. Gross rent means before expenses, which is why the amount can feel large compared with your actual profit.

The withheld tax must be remitted to the CRA by the 15th day of the month after the month the rent is paid or credited. The payer gives the non-resident an NR4 slip showing the gross rent and the tax withheld.

What tenants and agents need to know

The duty falls on the payer or agent. If they do not withhold and remit, the CRA charges compound daily interest on the amount not withheld and remitted, and may also charge a penalty.

Residential tenants are treated differently. The CRA does not expect residential renters to know their landlord's residency or to withhold 25% of rent. In practice, a property manager or agent handling the rent is the person most likely to carry the duty.

• Withhold 25% of gross rent before paying the non-resident, unless Form NR6 has been approved, in which case 25% is withheld on net rent.
• Residential tenants are not expected to know their landlord's residency or to withhold 25% of rent.
• Remit by the 15th day of the month after the rent is paid or credited.
• Issue an NR4 slip showing gross rent and tax withheld.

Form NR6: withholding on net rent

A non-resident and their agent can file Form NR6 on or before January 1 of each year, or before the first rental payment is due. Once it is approved, 25% is withheld on net rent instead of gross. Until approval, withholding stays on the gross rent.

Timing matters here. If you file late or approval has not come through, the agent should keep withholding on gross rent. Ask your agent how they will handle the period before approval.

The Section 216 return

A non-resident can file a separate Section 216 return. It reports gross rent, taxes only the net rental income, and claims the non-resident tax already withheld. The general deadline is two years from the end of the year the rent was paid or credited.

If Form NR6 was approved, the Section 216 return is due much sooner. For example, the 2025 return is due on or before June 30, 2026.

If the return is not filed by the due date, the election is invalid. The CRA can then assess non-resident tax on the gross rent, and the agent may be liable for the shortfall. A Section 216 return is separate from any other return the person files.

Practical steps for a non-resident owner

Rental expenses are still worked out under the usual rules. Interest on money borrowed to buy or improve the property is deductible, and CCA can be claimed on the building but not the land. CCA cannot be used to create or increase a rental loss.

• Tell your property manager or agent that you are a non-resident.
• Decide whether to file Form NR6 before the first rental payment is due or by January 1.
• Keep the NR4 slips and records of rent and expenses.
• Diarize the Section 216 deadline, which is much earlier if NR6 was approved.
• Talk to an accountant or lawyer about how your home country treats the same income.

Frequently asked questions