Rent paid to a non-resident attracts 25% withholding on the gross under section 212(1)(d) — no deduction for mortgage interest, taxes, fees or repairs. Section 215(1) requires the payer to withhold “notwithstanding any agreement or law to the contrary”, and section 215(3) puts the same duty on an agent or other person who receives the rent. A new subsection 215(1.2), deemed in force from 12 August 2024, relieves individual residential tenants — but it is expressly subject to section 215(3), so property managers, agents and brokerages are not relieved. Fail to withhold and section 215(6) makes you liable for the whole amount, plus a 10% penalty and compound daily interest. Remit by the 15th of the following month; file the NR4 by 31 March.
If you collect rent in Ontario for an owner who lives abroad, there is a provision that can make you personally liable for their tax. It is not obscure, it is not new, and it catches property managers and brokerages constantly.
Section 215(6) of the Income Tax Act: a person who fails to withhold “is liable to pay as tax … on behalf of the non-resident person the whole of the amount that should have been deducted or withheld”. That is 25% of the gross rent, out of your pocket, plus a 10% penalty under section 227(8), plus compound daily interest under section 227(8.3). You can then try to recover it from the landlord.
The rate is on gross, not net
Section 212(1)(d) imposes tax of 25 per cent on rent paid or credited to a non-resident. That is 25 per cent of the gross rent — no deduction for mortgage interest, property tax, condominium fees, repairs or your own management fee.
Section 215(1) requires the payer, “notwithstanding any agreement or law to the contrary”, to withhold and remit. Those words matter: a clause in your management agreement saying the owner handles their own tax does not help you.
The 2026 change: tenants are out, agents are still in
A new subsection 215(1.2), enacted 26 March 2026 but deemed in force from 12 August 2024, relieves an individual tenant paying rent for a residential property in which an individual resides. Under new subsection 215(1.3), the non-resident must then remit themselves.
Read the qualification. Subsection 215(1.2) is expressly subject to subsection 215(3) — the provision that catches agents. Section 215(3) requires that where an amount is “paid or credited to an agent or other person for or on behalf of the person entitled to payment” without tax having been withheld, the agent shall withhold and remit. So the relief for tenants does not extend to property managers, agents or brokerages. If you collect the rent, you withhold.
The deadlines
| Obligation | Deadline |
|---|---|
| Remit the withheld tax | On or before the 15th day of the month after the month the rent is paid or credited |
| File the NR4 information return | On or before the last day of March following the calendar year |
| Section 216 return, ordinary case | Within two years from the end of the year |
| Section 216 return where NR6 approved | 30 June following the year end — and filing becomes mandatory |
Late remitting penalties
| How late | Penalty |
|---|---|
| One to three days | 3% |
| Four or five days | 5% |
| Six or seven days | 7% |
| More than seven days, or not remitted at all | 10% |
| A second or later failure made knowingly or through gross negligence | 20% |
Late NR4 filing carries its own penalties, from $100 flat for one to five slips upward.
Section 216: the election that makes this fair
Section 216 lets a non-resident file a Canadian return and be taxed on net rental income at graduated rates instead of 25 per cent of gross. Under section 216(2), the Part XIII tax already remitted is deemed paid on account, and any excess is refunded.
For most owners with a mortgage, that difference is enormous — 25 per cent of gross rent can exceed the entire net profit. The trade-off in section 216(1): the non-resident is treated as resident for this purpose but is entitled to no personal credits under sections 118 to 118.9.
NR6 helps the owner and moves risk onto you
Form NR6 is an undertaking to file the section 216 return. Once the CRA approves it, withholding is on net rather than gross — a real cash-flow improvement for the owner.
But look at paragraph 216(4)(b). If the non-resident then fails to file the return in accordance with the undertaking, or fails to pay the tax on time, the person who made the election must pay the Receiver General the full amount they would otherwise have been required to remit — that is, 25 per cent of gross, less what was already remitted.
So NR6 is not a favour you do the owner at no cost. It converts your exposure from “withhold correctly” into “withhold correctly and depend on your client filing a tax return on time.” If you agree to it, agree to it knowingly.
If you manage a rental for an overseas owner
- Withhold 25 per cent of gross unless NR6 is approved. The tenant relief does not help you.
- Remit by the 15th of the following month. The late scale starts at three days.
- File the NR4 by 31 March.
- Confirm the owner’s residency in writing, and revisit it. Residency changes and nobody tells the property manager.
- Before agreeing to NR6, understand paragraph 216(4)(b). You are underwriting your client’s filing discipline.
- Do not rely on a clause in your agreement. Section 215(1) applies “notwithstanding any agreement… to the contrary”.
Managing a rental for an owner who lives outside Canada?
This is the single most expensive administrative mistake available in Ontario property management, and it is usually made by people acting in good faith on a clause in their management agreement that does not protect them. If you are not certain whether your arrangement withholds correctly, or whether an NR6 was approved, that is worth resolving now. I am not an accountant and the filing has to go through one — but I can tell you what questions to put and how urgent they are.
connect@jatindua.com · 437-987-1925 · Book a free consultation
Confidential. Read personally and answered within 24 hours. I never share, sell or distribute your information.
Free tool — AI home value estimator
Instant Home Valuation
What’s your home
worth today?
Answer six quick questions and get an instant value range built from current Toronto & GTA sale data — property type, size, condition, lot and location all weighted the way a real pricing conversation weighs them. Takes about ninety seconds.
Reading recent GTA sale data…
Building your estimate
Estimated market value
—
$0–$0
Most likely value $0 · roughly $0 per square foot
What moved the number
Starting from the area baseline for your property type, here’s what each answer added or subtracted.
Market context
Recent local averages for comparison.
—
A range is a starting point.
A strategy is what sells.
This model doesn’t know that your neighbour’s identical semi went $80,000 over asking last month, or which two upgrades actually pay back in your area. That conversation is free and takes twenty minutes.
Frequently asked questions
How much tax must be withheld on rent paid to a non-resident?
Twenty-five per cent of the gross rent, under paragraph 212(1)(d) of the Income Tax Act. It is calculated on the gross amount, with no deduction for mortgage interest, property taxes, condominium fees, repairs or management fees. Section 215(1) requires the payer to deduct or withhold the tax and remit it forthwith, notwithstanding any agreement or law to the contrary.
Does a tenant have to withhold tax on rent to a non-resident landlord?
Not since a change enacted in 2026. New subsection 215(1.2) provides that subsection 215(1) does not apply to an amount paid or credited by an individual to a non-resident as rent for a residential property in which an individual resides. It was enacted by S.C. 2026, c. 3, section 90 and is deemed to have come into force on 12 August 2024. Under new subsection 215(1.3), the non-resident must then remit the tax themselves. Critically, subsection 215(1.2) is expressly subject to subsection 215(3), so where an agent or property manager receives the rent the withholding obligation still falls on them.
What happens if a property manager does not withhold?
Section 215(6) provides that a person who has failed to deduct or withhold is liable to pay, as tax on behalf of the non-resident, the whole of the amount that should have been withheld, and is entitled to recover it from the non-resident afterwards. On top of that, section 227(8) imposes a penalty of ten per cent of the amount that should have been withheld, rising to twenty per cent where a penalty was already payable that year and the failure was made knowingly or in circumstances amounting to gross negligence, and section 227(8.3) requires interest at the prescribed rate from the day the amount should have been withheld.
When must non-resident withholding tax be remitted?
On or before the fifteenth day of the month following the month the rental income is paid or credited. Late remitting penalties under section 227(9) are three per cent where the amount is up to three days late, five per cent for four or five days, seven per cent for six or seven days, and ten per cent where it is more than seven days late or not remitted at all. The NR4 information return is due on or before the last day of March following the calendar year.
What is a section 216 election?
It allows a non-resident receiving rent from Canadian real property to file a Canadian return and be taxed under Part I on net rental income at graduated rates, instead of paying twenty-five per cent of gross under Part XIII. Under subsection 216(2), tax already withheld and remitted is deemed paid on account and any excess is refunded. The election must be filed within two years from the end of the year, or within six months where an undertaking has been filed. The non-resident is treated as a resident for this purpose but is entitled to no personal credits under sections 118 to 118.9.
What does form NR6 do, and what is the risk?
Form NR6 is the prescribed undertaking to file a section 216 return. Once approved by the Canada Revenue Agency, withholding is calculated on net rather than gross rental income, which materially improves the owner’s cash flow, and filing the section 216 return becomes mandatory. The risk falls on the agent: under paragraph 216(4)(b), if the non-resident does not file the return in accordance with the undertaking or does not pay the tax within the time provided, the person who made the election must pay the Receiver General the full amount they would otherwise have been required to remit, less amounts already remitted.
Related reading
- The foreign buyer ban: what it actually catches
- The Underused Housing Tax is gone — but not for 2022 to 2024
- Bare trusts and T3 reporting: where it stands now
- Turning your home into a rental: the section 45(2) election
Sources
Every figure on this page traces to one of these, and each was read on 1 September 2026. Primary sources only — statute, regulation, and the government or agency that administers the rule. Where I could not verify something from a primary source, the page says so instead of guessing.
- Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). Justice Laws Website, read 2 September 2026. Section 45(1) sets out the deemed disposition on a change of use; section 45(2) and 45(3) provide the elections; section 45(4) deems a section 45(3) election not to have been made where capital cost allowance was claimed. The four-year limit is in paragraph (d) of the definition of principal residence in section 54, and section 54.1 removes it where an arm’s length employer relocation applies and the taxpayer moves back in, subject to a forty kilometre test. Section 212(1)(d) imposes the twenty-five per cent withholding on rent paid to a non-resident, section 215(6) makes a person who fails to withhold liable for the whole amount, and section 216 provides the election to file a Canadian return on net rental income. Accessed 1 September 2026.
- Guide T4144, Income Tax Guide for Electing Under Section 216 — Canada Revenue Agency. Canada Revenue Agency, date modified 20 January 2026 for the 2025 tax year. States that the payer or agent, such as the property manager, must withhold non-resident tax of twenty-five per cent on the gross rental income and remit on or before the fifteenth day of the month after the month the rental income is paid or credited. A section 216 return may be filed within two years from the end of the year, or by 30 June following the year end where form NR6 has been approved, in which case filing the return becomes mandatory. States that the Agency will charge compound daily interest on amounts not withheld and remitted and may also charge a penalty. Accessed 1 September 2026.
- Guide T4061, NR4 — Non-Resident Tax Withholding, Remitting, and Reporting — Canada Revenue Agency. Canada Revenue Agency, date modified 25 August 2026. States that the NR4 information return is due on or before the last day of March following the calendar year, and that remittances must be received on or before the fifteenth day of the month following the month the amount was paid or credited. Sets out late remitting penalties of three per cent for one to three days, five per cent for four or five days, seven per cent for six or seven days and ten per cent for more than seven days or where no amount is remitted, and a penalty of ten per cent of the required Part XIII tax for failure to deduct, rising to twenty per cent for a subsequent knowing or grossly negligent failure. Accessed 1 September 2026.
- Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent — Canada Revenue Agency. Canada Revenue Agency. The prescribed undertaking that allows withholding on net rather than gross rental income under subsection 216(4) of the Income Tax Act. Under paragraph 216(4)(b), where the non-resident then fails to file the return in accordance with the undertaking or fails to pay the tax, the person who made the election must pay the Receiver General the full amount they would otherwise have been required to remit. Accessed 1 September 2026.
- Budget 2025 Implementation Act, No. 1, S.C. 2026, c. 3. Justice Laws Website, current to 21 June 2026 and last amended 14 June 2026. Sections 167 and 168 eliminate the underused housing tax and the filing requirement for 2025 and subsequent years. Section 169(1) repeals the Underused Housing Tax Act, and section 169(2) provides that the repeal comes into force on 1 January 2035, so the Act stays on the books until then. Section 90(2) enacts the new Income Tax Act subsection 215(1.2) relieving residential tenants of the requirement to withhold, deemed in force 12 August 2024. Accessed 1 September 2026.
About the author — Jatin Dua, Broker of Record
I’m the Broker of Record at RE/MAX Quantum Realty, 799 The Queensway in Etobicoke. I am not an accountant, a tax lawyer or an immigration lawyer, and nothing on this page is advice about your own position. Anything that turns on your residency, your corporate structure or your filing history goes to a professional who can see the whole picture.
What I can do is read the statute and the Canada Revenue Agency’s own material and quote them accurately, with the section number and the date the source carries. Tax rules in this area change fast and a great deal of what circulates online is describing law that has since been amended, deferred or repealed. Where that is the case, the page says so. connect@jatindua.com or 437-987-1925.