CRA: Income Tax Compliance for Non-Residents with Rental Properties in Canada 

Non-residents of Canada who own properties within the country and earn rental income from them must adhere to specific reporting requirements. Here’s a simplified overview: 

Filing Requirements for Non-residents with Rental Income from Canada: 

• Income Taxes on Rental Income: 
• Non-residents are subject to Part XIII withholding requirements on rental income. 
• The payor must withhold taxes on the gross income, which is the final liability, and no Canadian tax return is necessary. 
• However, if no deductions are made, a section 216 tax return allows a non-resident to claim deductions. 
• If a non-resident wishes to have a reduced withholding rate, they can use form NR6, but it requires approval from the CRA. 
• If the CRA approves the NR6 form, a section 216 tax return must be filed by June 30th of the subsequent year. 

• Disposition or Sale of Property: 
• Non-residents must file a request for a certificate of compliance when they sell a property in Canada. 
• For rental properties, form T2062A is required in addition to form T2062. 
• This request must be filed within 10 days of the property’s disposition. It’s essential to note that if the seller was a non-resident at the time of purchasing the same property, the Sec 116 withholding requirement might apply. 

• Underused Housing Tax: 
• This is a new set of rules effective from tax years starting in 2022. 
• The first UHT returns (UHT-2900) are due in 2023. 
• Due to confusion surrounding these new rules, the CRA extended the deadline to October 31st, 2023. The standard deadline is April 30th. 

Important Note: 

This information is for general purposes only. Non-resident rules can become intricate even with minor changes in facts. It’s crucial to seek advice from a reputable international tax expert to ensure proper compliance. This post focuses on compliance with the Canada Revenue Agency’s (CRA) reporting requirements and does not address other local regulations, such as property taxes, vacant home taxes, or land transfer taxes.