My client lives abroad and rents out a condo in Canada. How do they report the rent, and when is the section 216 return due?
A section 216 return (Form T1159) lets a non resident pay tax on net Canadian rental income instead of the 25% Part XIII tax on gross rent. With an approved NR6, the agent withholds 25% of net rent and the 2025 return was due June 30, 2026. Without one, your client has two years after the year end to file.
When is the section 216 return due?
The deadline depends on how the rent was withheld during the year. For 2025 rent, the CRA lists three dates canada.ca.
| Situation | 2025 rent | 2026 rent |
|---|---|---|
| Form NR6 sent to the CRA | January 1, 2025 (or before the first rent is due) | January 1, 2026 (or before the first rent is due) |
| NR6 approved: file the section 216 return | June 30, 2026 | June 30, 2027 |
| No NR6, 25% withheld on gross: refund election | December 31, 2027 | December 31, 2028 |
| Property sold with CCA recapture: file and pay | April 30, 2026 | April 30, 2027 |
| Balance owing on the return | April 30, 2026 | April 30, 2027 |
| Agent remits Part XIII tax | 15th of the month after the rent is paid or credited | Same |
The June 30 date comes from the undertaking itself: a non resident who files an NR6 commits to file within six months after the year end, instead of the usual two years laws-lois.justice.gc.ca. Miss the applicable deadline and the CRA treats the election as invalid
canada.ca.
As of October 2026, the two year window for 2024 rent closes December 31, 2026. A client who had 25% withheld on gross rent for 2024 and never filed still has until then to claim the refund.
How is tax calculated on a section 216 return?
Without an election, Part XIII tax is 25% of the gross rent, under paragraph 212(1)(d) laws-lois.justice.gc.ca, and that is usually the client's final Canadian tax
canada.ca. The section 216 return replaces it with Part I tax on net rental income: gross rent on line 12599, net rent on line 12600, with Form T776 to work out the net figure
canada.ca. For the expense side, see the T776 page.
The 2025 T1159 applies federal brackets only, then adds a 48% surtax in place of provincial tax canada.ca. The surtax rule is subsection 120(1) of the Income Tax Act
laws-lois.justice.gc.ca.
| 2025 taxable income (line 26000) | Federal rate on the excess | Tax on lower brackets |
|---|---|---|
| $0 to $57,375 | 14.5% | $0 |
| $57,375 to $114,750 | 20.5% | $8,319.38 |
| $114,750 to $177,882 | 26% | $20,081.25 |
| $177,882 to $253,414 | 29% | $36,495.57 |
| Over $253,414 | 33% | $58,399.85 |
| Then add the non resident surtax | 48% of federal tax |
The form has no line for the basic personal amount or any other personal credit. The only deductions are an RRSP deduction (line 20800), an FHSA deduction (line 20805), support payments (line 22000) and other deductions on line 23200, plus a minimum tax carryover on line 40427 canada.ca. The 2026 T1159 isn't published yet; for 2026 federal rates see the 2026 brackets.
Worked example: a $2,000 a month condo
Your client lives in the US and rents a Toronto condo for $2,000 a month. The property manager pays $15,000 of deductible expenses during 2025 (property tax, mortgage interest, condo fees, insurance and the management fee). Your client claims no CCA.
| Step | 25% on gross, no election | NR6 approved |
|---|---|---|
| Gross rent | $24,000 | $24,000 |
| Base the agent withholds on | $24,000 gross | $9,000 net |
| Part XIII tax withheld at 25% | $6,000 | $2,250 |
| Net rent on the T1159 (line 12600) | $9,000 | $9,000 |
| Federal tax at 14.5% | $1,305.00 | $1,305.00 |
| Surtax at 48% | $626.40 | $626.40 |
| Tax on the section 216 return | $1,931.40 | $1,931.40 |
| Refund | $4,068.60 | $318.60 |
The election cuts the final tax from $6,000 to $1,931.40, an effective rate of about 8% of gross rent. With no NR6, your client waits for a refund of $4,068.60 and can file any time up to December 31, 2027. With an approved NR6, only $2,250 left Canada in 2025, but the return was due June 30, 2026.
The NR6 column assumes the agent pays every expense out of the rent. The CRA describes the NR6 base as the rental income available after the rental expenses have been paid canada.ca, so the withholding can differ from 25% of the final T776 net figure.
How Form NR6 reduces the withholding
Form NR6 is an undertaking by the non resident to file a section 216 return canada.ca. Your client (or each non resident partner) and the agent complete it together, and it goes to the CRA on or before January 1 of each year, or before the first rent payment is due
canada.ca.
Until the CRA approves the NR6 in writing, the agent keeps withholding 25% on gross rent. After approval, the agent withholds 25% of the net amount and remits it by the 15th of the month after the month the rent was paid or credited canada.ca. The agent reports the tax on an NR4 slip; for the slip and remittance dates see the NR4 deadline page.
The undertaking has teeth. If your client files late or doesn't pay on time, the payer must remit the rest of the tax that would have been withheld on gross laws-lois.justice.gc.ca. An approved NR6 also makes the return mandatory, even when your client owes nothing or has a net rental loss
canada.ca.
Edge cases that catch preparers
All or nothing. The election covers every Canadian rental property and timber royalty your client had that year; you can't elect on one property and leave another at 25% of gross. Interest a Canadian bank pays on deposited rent stays off the return canada.ca.
Losses are trapped. A rental loss goes on line 12600 in brackets, but it can't reduce income on any other Canadian return or in any other year, and other losses can't reduce section 216 income canada.ca.
CCA comes back on a sale. If your client claimed CCA on an earlier section 216 return and sells, they must file a return reporting the recapture by April 30 of the year after the sale, NR6 or not canada.ca. Subsection 216(5) is the rule that forces that return
laws-lois.justice.gc.ca. Tax already remitted on the sale goes on line 47600 from Form T2064 or T2068
canada.ca. See the section 116 certificate page for the disposition side and recapture and terminal loss for the math.
Short term rentals. Expenses of a short term rental that doesn't comply with provincial or municipal rules can't be deducted on the T776 canada.ca. See the short term rental rules.
No election, no relief. If your client was required to file and didn't, the CRA assesses 25% of gross rent minus the tax already remitted, plus interest. An agent who failed to withhold and remit faces compound daily interest and possibly a penalty canada.ca.
Filing the T1159
The section 216 return can't be filed online. Mail Form T1159 with the T776 (or an equivalent statement) and copies of the NR4 slips, whose box 17 tax goes on line 43700 canada.ca. The 2025 form is on the CRA's T1159 page
canada.ca.
Residents of Denmark, France, the Netherlands, the UK or the US mail to the Winnipeg Tax Centre; residents of every other country mail to the Sudbury Tax Centre. If an NR4 slip is missing, file on time anyway, report the income and attach a note listing the missing slips canada.ca.
The section 216 return covers rent and timber royalties only. Employment income, business income and capital gains go on a regular non resident return; see when a non resident has to file.
Sources
Can my client claim the basic personal amount on a section 216 return?
Does a section 216 return make sense if the property runs at a loss?
Yes, when 25% was withheld on gross rent. A net loss means no tax on the return, so the whole amount withheld comes back as a refund, but the loss itself can't be used anywhere else canada.ca.
Can my client file the section 216 return as part of a regular non resident return?
What if the client sent an NR6 late in the year?
The agent withholds 25% on gross rent until the CRA approves the NR6 in writing canada.ca. The NR6 is due on or before January 1, or before the first rent payment is due, so file it before the year starts to get the lower withholding for the whole year.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.