Tax Liabilities for Non-Resident Canadian Citizens Earning Rental Income from Canada
There are two ways income is generally taxed, federal level and provincial level. A non-resident Canadian citizen having a rental income from the property based in Canada brings along a lot of basic requirements to look after in order to avoid tax penalties and other issues. Here, you can read about certain tax liabilities and important regulations to keep in mind-
Certain Tax Liabilities and Regulations to Remember
Appoint a responsible Tenant/Payer for your property
The payer or second owner of your rental property in Canada has to reserve an approximate 25% of the overall gross rental payment that is paid to you for your property.
Importance of NR4 form statement
As a non-resident, you need to collect two coloured copies of the NR4: Statement of amounts or payments credited or paid to you against your rental property. This is important as it shows your annual gross rental income and the reserved 25% tax against your non-residential status.
Importance of NR6 form and its use
The form NR6 falls under section 216 of the Income Tax Act. Under this section, a non-resident Canadian citizen is allowed to elect themselves for tax returns i.e. you opt to state your actual rental income of any and all your properties in Canada.
Under this tax return, you get to benefit from a lesser tax burden as you choose to pay a certain amount of tax on your net amount of the rental income instead of the gross amount. On the other hand, you and your agent/tenant are required to fill up the form NR6 and submit it to the CRA for their approval.
Important dates to remember
The dates to clear the tax payments by the payer or tenant is either on or before the 15th day of the current month for the previous month when the rent amount was credited or paid to your account.
The form NR6 needs to be submitted to the CRA department on or right before January 1 of every year.
If your NR6 form is accepted, you are required to file an Income Tax Return under section 216 maximum by or before June 30 of the year after.
Available Help for Queries
It all sounds too complicated in the beginning but don’t worry as in Canada, you will easily find Canadian Tax Consulting Service available in almost all Canadian states and cities that can guide your agent/tenant well. These services help you get a better understanding of the tax systems of Canada and the right means to pay out or avoid heavy tax liabilities on your rental income. The Accounting & Tax Company can also help you with the same.
However, if you are currently in the US with property in Canada or part of Canada like Toronto, you can easily meet US Tax Consultants in Toronto or contact International Tax Consultants in Toronto to help you with the formalities required to avoid heavy tax liabilities on the rental income you obtain from Canada property.
Follow us:
