Non-tax residents who receive rental income from Canadian property must prepay 25% of the gross rental income to the tax authorities, and may later claim a refund through their tax return. If a Canadian permanent resident or citizen agrees to act as your agent and provide a tax guarantee, you can prepay tax based on an estimated 25% of the net income.

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• Without an agent: Non-residents must pay 25% of the total rental income by the 15th of the following month after receiving the rental income. For example, if the rental income for January is $3,000, the tax payment of $750 must be made by February 15th. This prepayment system is a form of tax control for non-tax residents by the tax authorities.

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• With an agent (any Canadian tax resident): After submitting and getting approval for NR6, non-residents can pay tax based on 25% of the estimated net income. In the case of $3,000 monthly rent, after deducting estimated property taxes and mortgage interest, the estimated monthly profit may be reduced to $1,000. In this case, the tax payment due by the 15th of the next month will only be $250.

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Regardless of whether there is an agent, the accountant will calculate the actual net income when filing taxes for the following year, and any adjustments will be made. Therefore, the final amount paid to the government will be the same in both cases. It is important to note that if a non-resident avoids taxes or fails to file taxes while having an agent, the agent will be responsible for the consequences.

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If you have any other tax-related questions regarding rental properties for non-tax residents, please consult with us.