Non-Resident Tax in Canada
Non-resident tax in Canada: 25% Part XIII withholding, NR6 and section 216 for rent, T2062 clearance certificates when selling, and pensions abroad.
The short version
- Non-residents pay Canadian tax only on Canadian income: wages for work done here, business here, Canadian real estate, and passive income such as rent, dividends and pensions.
- Passive income gets a flat 25% Part XIII withholding at source, often cut to 15% or less by a tax treaty. Interest from an arm's length Canadian payer is generally exempt.
- Rent from Canadian property: 25% of the gross rent is withheld unless your agent files form NR6, which moves the withholding to 25% of net rent. Either way, a section 216 return can get some back.
- Selling Canadian real estate: tell CRA within 10 days on form T2062 and get a clearance certificate, or the buyer must hold back 25% of the price, 50% on rental buildings.
- Working in Canada as a non-resident: normal payroll deductions, and you file a Canadian return. The 90% rule decides how many credits you get.
Non-Resident Tax in Canada
Leaving Canada does not end your relationship with CRA; it just changes it to long distance. If you still own a condo in Toronto, collect a pension, or hold Canadian shares, CRA takes its cut at the source, before the money crosses a border, and leaves it to you to ask for any overpayment back. Most of the cost of being a non-resident comes from not knowing which forms move that withholding from "the maximum" to "what you actually owe". Here they are.
What Non-Residents Pay Tax On
| Canadian income | Tax treatment | Form or slip |
|---|---|---|
| Employment in Canada | Regular tax, CPP and EI by payroll; file a Canadian return | T4 |
| Rent from Canadian property | 25% of gross withheld, or 25% of net with an NR6 | NR4; section 216 return |
| Dividends from Canadian companies | 25%, often 15% under a treaty (U.S. residents: 15%) | NR4 |
| Interest paid by an arm's length Canadian payer | Generally exempt | None |
| CPP, OAS, RRSP and RRIF payments | 25%, often reduced by treaty; section 217 election can lower it | NR4 |
| Sale of Canadian real estate | Capital gain taxed in Canada; clearance certificate needed | T2062; non-resident return |
Becoming a non-resident is its own event, with a deemed sale of many assets; see leaving Canada. Whether you are a non-resident at all: tax residency.
Own property in Canada but live abroad?
Tell the assistant your country, what you own here and what it earns. It works out the withholding, which forms cut it, and what to file each year.
Renting Out Canadian Property
- Appoint a Canadian agent, usually a property manager or a friend, who withholds and remits the tax by the 15th of the month after each rent payment. If the tenant pays you directly, the tenant is on the hook to withhold.
- Default: 25% of gross rent. On $2,000 a month, that's $6,000 a year, whether or not the property makes money.
- With form NR6, filed by January 1 or before the first rent payment of the year, whichever is earlier, withholding is 25% of the estimated net rent after expenses. A condo netting $6,000 a year would have $1,500 withheld instead of $6,000.
- File a section 216 return to pay tax at normal rates on net rental income. With an NR6, it is due June 30 of the next year; without one, you have two years from the end of the tax year to file and claim a refund.
Expenses and CCA work like they do for residents; see rental expenses and CCA on rentals. Claiming CCA now raises recapture later.
Selling Canadian Real Estate as a Non-Resident
| Step | Rule |
|---|---|
| Notify CRA | Form T2062 no later than 10 days after the sale (or before it). Late: $25 a day, minimum $100, maximum $2,500. |
| Pay or secure the tax | Usually 25% of the expected gain, to get the clearance certificate |
| No certificate? | The buyer withholds 25% of the whole price, or 50% for depreciable property such as a rental building, and remits it to CRA |
| File a return | A non-resident return for the year of sale, reporting the gain; the payment is credited and any excess refunded |
Years you were a non-resident can't be covered by the principal residence exemption, so a former home that was rented out after you left usually has a taxable part; see the principal residence exemption and the rental sale calculator.
Selling a Canadian rental from abroad?
The Rental Sale SmartFile works out the gain, CCA recapture and the clearance certificate payment, so the holdback is not bigger than it needs to be.
Pensions and Retirement Savings
- CPP and OAS keep paying abroad, with 25% withheld unless a treaty lowers it. OAS also needs a yearly OAS Return of Income from most non-residents, or OAS can be stopped; see the OAS clawback.
- RRSP and RRIF withdrawals get 25%, sometimes 15% on periodic pension payments under a treaty. A section 217 election can tax them at normal Canadian rates if that is lower, which helps people with little other Canadian income; see RRIF withdrawals.
- TFSA: you can keep it, but new contributions while a non-resident are taxed at 1% a month; see TFSA rules. Your new country may tax its income.
Other Rules Non-Residents Run Into
- Buying homes: the federal ban on most non-Canadians buying residential property runs to January 1, 2027, with exceptions. Ontario charges a 25% non-resident speculation tax province-wide.
- Underused Housing Tax: the 2025 federal budget proposed ending it starting with 2025; returns for earlier years still applied.
- Doing business in Canada: services performed here can face 15% withholding on fees (Regulation 105) unless waived.
- Foreign tax credit: your home country usually credits tax paid to Canada; see foreign tax credits.
Non-Resident Tax Questions
Do non-residents pay tax in Canada?
Yes, on Canadian income only: employment in Canada, business carried on in Canada, gains on Canadian real estate, and passive income such as rent, dividends and pensions, which is usually taxed by withholding at the source.
What is the non-resident withholding tax rate in Canada?
25% under Part XIII of the Income Tax Act, reduced by many tax treaties, often to 15% on dividends and pensions. Arm’s length interest is generally exempt.
How do non-residents pay tax on Canadian rental income?
The tenant or agent withholds 25% of gross rent. With form NR6, withholding is 25% of net rent, and a section 216 return is due by June 30 of the next year. Without an NR6, a section 216 return can be filed within two years to recover overpaid tax.
What is a section 116 clearance certificate?
When a non-resident sells taxable Canadian property such as real estate, they notify CRA on form T2062 within 10 days and pay or secure tax on the gain. CRA then issues a certificate, and the buyer doesn’t have to hold back 25% or 50% of the price.
Can a non-resident claim the principal residence exemption?
Only for years they were resident in Canada. Gains for the years of non-residence are generally taxable.
What is a section 217 tax return?
An election non-residents can make for certain Canadian income, such as CPP, OAS, pensions, RRSP and RRIF payments, to be taxed at regular Canadian rates instead of the flat 25% withholding. It helps when your total Canadian income is modest. The return is generally due June 30 of the following year.
Sources: CRA, Rental income and non-resident tax: filing requirements; CRA, T4144, Electing under section 216; TaxTips.ca, Non-resident workers in Canada; McMillan LLP, Underused Housing Tax eliminated. Checked October 2026. Treaty rates vary by country and type of income. The section 116 rules, including the 50% rate for depreciable property and the penalty, are summarized from professional sources, not read directly from CRA for this page. We could not confirm whether the Underused Housing Tax repeal has been enacted. The foreign buyer ban end date may be extended again.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.