Introduction to Canadian Non-resident Property Rental Tax Service
The Canada Revenue Agency stipulates that non-tax residents (such as investors from China, the United States or outside Canada) need to withhold 25% of their income from rental income from real estate in Canada. This withholding tax is often more than the actual amount payable. In April of the following year, you can declare non-resident tax to get the overpaid tax back from the Canada Revenue Agency.
Why does this happen? Because Canada's tax base is based on net rent (i.e., gross rental income minus property-related expenses, such as property taxes, management fees, etc.), and withholding is based on a proportion of gross rental income, so non-residents of Canada who have rental income in Canada generally pay more tax. Therefore, the Canada Revenue Agency allows non-residents of Canada to file a tax return for rental tax to refund the overpaid tax. This is called "Income Tax Filing for Electing Under Section 216".
Who is a non-resident of Canada?
- Foreign residents who do not have Canadian permanent residency or citizenship
- People who have been away from Canada for a long period of time and have no connection to Canada, including Canadian permanent residents and Canadian citizens.
1. The annual tax return for non-tax residents without a Canadian agent is $300, which includes:
- Reconcile accounts with the tax bureau at the end of the year and apply for NR4;
- and finally collecting information from clients and submitting tax forms.
2. The annual tax return for a non-tax resident with a Canadian agent is $400, which includes:
- At the beginning of the year, remind customers to collect materials for NR6 application and submit;
- Set up annual prepayment tax according to the tax bureau’s feedback or directly help customers pay the prepayment tax to the tax bureau;
- And all other services included in 1.
- Sign a Canadian personal tax filing service agreement with the client;
- Send the Canadian personal tax return information collection form to the customer, and the customer will fill it out carefully and collect relevant tax return information; if your Canadian real estate agent has helped you withholding, please provide proof of withholding (NR4 form)
- We process the Canadian non-resident rental tax form based on the information and materials provided by the client and after confirmation with the client;
- After completing the personal tax form, please ask the customer to sign and confirm;
- Submit your personal tax return by mailing to complete your Canadian non-resident property rental tax return;
2. Ask your accountant to submit your NR6 form based on the estimated income and expenses of the rental property for the year. Of course, you can also submit it yourself.
Most importantly: The deadline for filing NR6 is December 31st of the year before the property is rented out, but it is worth noting that you need to obtain the approved letter for NR6 before receiving the first rent.
For example, if you want to rent out your property in January 2019, then it is planned that you will receive your rent for January on January 10, which means that you need to have an approved letter for NR6 before January 10, 2019. Therefore, although the deadline is December 31, we recommend that you apply as early as possible because it takes a long time for the tax bureau to review NR6.
3. As mentioned above, you need to have a property withholding agent, and the agent must be a Canadian resident.
4. The agent is required to deduct 25% of the net rental income calculated based on NR6 every month.
5. Be prepared to submit the form by March 31 of the following year.
6. Prepare and file a Canadian non-resident income tax return for the net taxable rental income pursuant to section 216 of the Canadian Income Tax Act.
7. Once your income tax return is assessed and you receive a non-resident tax assessment from the CRA, review it carefully as the CRA may make changes after reviewing it.
* Repeat steps 2 to 7 each year until the property is sold or you become a Canadian resident for tax purposes.
Question: I have never thought about filing a tax return to get the excess tax refunded. Is it still too late now?
A: Everything has its time limit. The Canada Revenue Agency stipulates that you can claim back the overpaid rental income-related taxes by declaring Canadian non-resident taxes within two years of December 31 of the tax year. That is, the overpaid withholding taxes you paid in 2018 can be claimed back before December 31, 2020. After 2020, you can no longer apply for a refund. The same applies to the following years.
Canadian non-resident property rental tax filing service fees:
Our fees have always been clearly marked and have not changed in the past five years: 300 per person per property per year. Our service tenet is to improve efficiency, reduce unnecessary costs, and maintain high-quality and low-cost services.
Q: My gross rental income has been withheld by the agency. How should I file my tax return?
A: Please provide us with the certificate of withholding from the Canadian agency, which is called NR4. We can then help you file your tax return for non-resident rental properties in Canada based on the property information you provided.
Q: How long does the tax filing service take?
A: Generally speaking, we will process the tax form within seven working days if the information and materials submitted by the customer are complete.
Q: Do you submit your tax returns electronically or by mail?
A: The Canada Revenue Agency stipulates that the tax return for Canadian non-resident rental income must be submitted by mail. We usually submit it by express delivery.
Q: Do you provide consulting services on Canadian property rental taxes?
A: We provide financial, tax and business consulting services to our clients all year round. We provide 24/7 online consulting services. We are open seven days a week. If you need any advice, you can make an appointment in advance.
