Form NR6 Explained: Net Withholding on Canadian Rent
Withholding on net rent instead of gross, the timing, the agent, and the return that must follow
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Form NR6 is the undertaking a non-resident landlord files with the CRA, through their Canadian agent, to have non-resident tax withheld on net rental income rather than gross rent. In exchange, the landlord commits to filing a section 216 Canadian return by June 30 of the following year. Without it, the agent withholds 25 percent of every gross rent payment.
On this page
How it works
| Item | Detail |
|---|---|
| Who files | The non-resident and their Canadian agent (property manager or other agent) jointly |
| When | On or before January 1 of the year, or before the first rent payment is due; the agent withholds on gross rent until the CRA approves the NR6 in writing |
| Withholding | 25 percent of the net rent available after rental expenses are paid (capital cost allowance not deducted), remitted by the 15th of the following month |
| Commitment | Section 216 return due June 30 of the following year |
| If the return isn't filed | The landlord owes 25 percent of the gross rent less tax already remitted, plus interest, and the CRA can assess the agent for the same amount, plus penalty and interest |
Without an NR6
The agent withholds 25 percent of gross rent and remits it; the landlord can still file a section 216 return within two years after the end of the year to recover the excess, but cash is tied up all year. An agent or tenant who fails to withhold is liable for the full tax that should have been withheld.
The U.S. side
A U.S.-resident landlord reports the Canadian rent on their U.S. return and claims the Canadian tax actually paid on the section 216 return as a foreign tax credit (Form 1116) — though the credit can't offset the 3.8 percent net investment income tax.
Frequently asked questions
What is Form NR6?
An undertaking that lets a non-resident landlord's agent withhold 25 percent of net rent instead of gross, in exchange for filing a section 216 return.
When must NR6 be filed?
On or before January 1 of the year, or before the first rent payment is due.
What if I miss the section 216 deadline?
You owe 25 percent of the gross rent less tax already remitted, plus interest, and the CRA can assess your agent for any shortfall.
Can I still recover over-withholding without an NR6?
Yes, by filing a section 216 return within two years after the end of the year the rent was paid.
Official sources
The Canada Revenue Agency explains: “Use this form if you are a non-resident receiving rent from real or immovable property or a timber royalty and you want your agent to be able to elect to deduct and remit tax at the applicable rate on the net amounts available to you.” — Canada Revenue Agency, NR6 Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property or Receiving a Timber Royalty, https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/nr6/nr6-23e.pdf
The Canada Revenue Agency explains: “If you receive rental income from real or immovable property in Canada, the payer or agent (such as the property manager) must withhold non-resident tax of 25% on the gross rental income paid or credited to you.” — Canada Revenue Agency, T4144: Income Tax Guide for Electing under Section 216, https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4144/income-tax-guide-electing-under-section-216.html
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our Canadian Tax Desk handles NR6 undertakings and section 216 rental returns for non-resident owners of Canadian property. See pricing or book a call.
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U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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