If you own Canadian property as a non-resident, the NR4 and NR6 forms are central to your CRA obligations. Errors or omissions can result in significant penalties and withholding tax surprises.
The NR4 — Statement of Amounts Paid to Non-Residents
The NR4 is issued by a Canadian payer to report amounts paid to a non-resident — the non-resident equivalent of a T4 or T5. Common situations: rental income, dividends, RRSP/RRIF withdrawals after emigrating, and pension payments.
Canadian payers must withhold 25% non-resident withholding tax on amounts paid (subject to tax treaty reductions). NR4 slips are filed by March 31 annually.
The NR6 — Reducing Withholding on Rental Income
Withholding 25% of gross rent is heavy when your actual net income is much lower. The NR6 lets you withhold 25% of net rental income instead.
The NR6 Process
- Non-resident and Canadian agent complete Form NR6 before January 1 of the tax year
- CRA approves the NR6
- Agent withholds on estimated net income
- Non-resident files a Section 216 return by June 30 of the following year
The Section 216 Return
This is a separate Canadian return to report actual net rental income. If the NR6 is approved but the Section 216 return is missed, the reduced withholding arrangement is invalidated and the agent becomes liable for full 25% withholding on gross rent.
Key Tips
- File the NR6 well before year-end — CRA processing can be slow
- Keep a Canadian agent who can handle monthly remittances
- Review tax treaties — many reduce the 25% rate
CMP Accounting has experience with NR4/NR6 filings and Section 216 returns. Reach out here.