Under current rules, when rent on Canadian property is paid to a non-resident, 25% of the gross rent must be withheld and remitted to CRA. This could be the case where, for example, a college student pays rent to live in the basement of a house owned by a non-resident.
If the non-resident provides an NR6 form, the 25% withholdings are based on the net rent. Effective August 12, 2024, the Department of Finance released a proposal that would provide an exclusion to this withholding requirement.
Specifically, an individual would not have to withhold tax in respect of an amount paid or credited to a non-resident as rent for the use of a residential property in which an individual resides (whether or not that individual is the one paying the rent). In this case, the non-resident person would be required to remit and report the withholding, assuming that an agent of the non-resident was not already required to do so.
All rents paid on Canadian real estate to a non-resident that do not fit within the specific terms of this exception would continue to require withholdings and reporting by the tenant.
ACTION: If this proposal is legislated, individuals would no longer be required to withhold amounts in the specific situations covered by this proposal.
