Non-resident tax in Canada can continue after a person leaves the country. An owner of Canadian rental property—or a non-resident selling taxable Canadian property—can face withholding, remittance, return and certificate-of-compliance requirements with different deadlines.
The two workstreams most often confused are the annual rental-income process under section 216 and the property-disposition process under section 116, commonly involving Form T2062. They should be coordinated, but one does not replace the other.
Last reviewed: August 25, 2026.
In this guide: residence, Section 216 returns, NR6 withholding, Section 116 and T2062, and a property timeline.
First confirm that non-resident treatment is appropriate
Canadian residence is based on all relevant facts. The CRA emphasizes significant residential ties such as a home, spouse or common-law partner, and dependants in Canada. A person can also be affected by deemed-residence rules or a tax treaty.
Before using non-resident forms, document the departure date, available homes, family location, travel, immigration status, economic ties and residence in the other country. If the residence conclusion changes, the rental and sale analysis may also change.
Where the departure involves foreign investments, companies, trusts or family members in several countries, coordinate this review with the high-net-worth cross-border tax checklist for Canadian families.
Canadian rental income: the default withholding rule
The CRA’s section 216 guidance describes a statutory 25% non-resident tax on gross Canadian rental income or timber royalties when no approved alternative applies. A Canadian agent or payer generally withholds and remits the tax.
Because the default is based on gross rent rather than profit, mortgage interest, property tax, management fees, repairs and other expenses do not reduce the monthly withholding under the default method.
Section 216: electing to report net rental income
A non-resident may elect under section 216 to file a Canadian return reporting net rental income. This can be beneficial where the tax withheld on gross rent exceeds the tax calculated on net rental income.
The CRA says a taxpayer seeking a refund after year-end generally files Form T1159 within two years from the end of the year in which the rental income was paid or credited. Special deadlines can apply, including where an NR6 undertaking was approved or where capital cost allowance recapture is involved. Confirm the deadline for the actual facts rather than relying on the general two-year period.
Form NR6: withholding on estimated net rent
Form NR6 is an undertaking by the non-resident and Canadian agent to file a section 216 return. If the CRA approves it, withholding may be based on 25% of estimated net rental income instead of gross rent.
Key controls include:
- submit NR6 on or before January 1 of the year, or before the first rental payment is due;
- continue withholding on gross rent until written CRA approval is received;
- remit the required amount by the applicable monthly deadline; and
- file the section 216 return by June 30 of the following year when NR6 was approved.
If the undertaking is not fulfilled, the CRA says the non-resident can become liable for the full 25% tax on gross rental income, less amounts already remitted, plus applicable interest.
Keep the agent and owner records aligned
For each property and calendar year, maintain:
- executed leases and rent ledgers;
- gross receipts by month;
- invoices and proof of rental expenses;
- NR6 submission and approval;
- remittance records and NR4 reporting;
- a capital-cost-allowance schedule; and
- the section 216 return and notice of assessment.
All Canadian rental properties are generally reported together on one section 216 return for the owner. Co-ownership, partnerships, beneficial ownership and agency arrangements require separate analysis.
Selling Canadian property: section 116 is a separate process
A non-resident disposing of taxable Canadian property may have to notify the CRA and obtain a certificate of compliance. Canadian real or immovable property is a core example of taxable Canadian property.
The CRA identifies these forms for different property types:
- Form T2062 for an actual or proposed disposition of many types of taxable Canadian property, including capital real property;
- Form T2062A for certain Canadian resource, timber, depreciable or non-capital real property; and
- other T2062-series forms for specified transactions.
A rental property can require both T2062 and T2062A where the sale involves a capital gain and depreciable property with recapture or terminal-loss considerations.
Plan the certificate before closing
The certificate process affects the vendor and purchaser. A closing checklist should establish:
- legal and beneficial ownership;
- the vendor’s residence and treaty position;
- property type and use;
- original cost, improvements and depreciation history;
- sale agreement, proceeds and selling costs;
- appraisal or valuation support;
- forms required and whether the disposition is proposed or completed;
- payment or acceptable security; and
- responsibilities of the purchaser’s lawyer, the vendor’s lawyer and tax adviser.
Do not wait until after closing to discover that information or funds needed for a certificate are unavailable.
Treaty protection must be documented
A tax treaty may exempt or limit Canadian tax on a particular gain or income stream, but treaty protection depends on the relevant article and complete residence and ownership facts. The CRA’s section 116 guidance describes additional procedures for treaty-protected property, including Form T2062C in certain related-party acquisitions.
A foreign tax return or residence certificate alone may not answer beneficial-ownership, property classification or treaty-entitlement questions.
The Canadian return after a sale
The certificate-of-compliance process is not necessarily the final income-tax filing. The non-resident may still need a Canadian income tax return for the year of sale to report the disposition, calculate the final gain or loss, claim selling costs and reconcile amounts paid or withheld.
Where the property produced rent, coordinate the sale-year section 216 return, depreciation recapture and disposition reporting. Keep the certificate, closing statement and final return in one file.
A non-resident property timeline
At acquisition or departure from Canada
- Confirm residence and beneficial ownership.
- Establish Canadian tax cost and retain the purchase file.
- Appoint a Canadian agent for rent and remittances where required.
- Decide whether an NR6 process is appropriate.
Each rental year
- Submit NR6 before rent starts or by the annual deadline if using it.
- Withhold and remit under the approved method.
- Reconcile rent and expenses monthly.
- Prepare NR4 reporting and the section 216 return.
Before listing or accepting an offer
- Reconstruct cost, improvements and capital cost allowance.
- Identify T2062 and T2062A requirements.
- Determine valuation, payment and treaty documentation needs.
- Coordinate the proposed closing timeline.
After closing
- Complete any outstanding certificate steps.
- File the Canadian return for the disposition where required.
- File the sale-year section 216 return and report recapture where applicable.
- Reconcile Canadian and residence-country reporting and foreign tax credits.
Common mistakes
- Withholding 25% of net rent before NR6 approval.
- Assuming a property manager has accepted all tax responsibilities.
- Missing the June 30 section 216 deadline after an approved NR6.
- Claiming capital cost allowance without planning for recapture on sale.
- Treating a T2062 certificate as the final tax return.
- Starting the certificate process only after closing.
- Applying treaty language without proving residence and entitlement.
If a missed return, remittance or disclosure is discovered, review the 2026 CRA Voluntary Disclosures Program decision guide before choosing a correction route.
Coordinate rent, sale and residence in one engagement
Perfect Accounting’s past returns and compliance service can support Canadian non-resident filing reviews. Owners with family, trust or cross-border structure considerations may also need the high-net-worth and family tax service or Canada–UAE tax advisory.
If a rental year, sale or certificate deadline is approaching, request an introductory call with the property address, ownership details, residence country, tax years and expected closing date.
This article provides general information as of the review date. Canadian residence, withholding, treaty and filing results depend on the complete facts and current law and guidance. It is not legal or tax advice.