Non-residents receiving rental income from Canadian property
The corporate tax rate has been reduced again (for income over $500,000 and investment income). If you are an employee who provides services, it may be beneficial to incorporate and provide the services through a "personal services business" corporation instead. The tax rate is only 25%, as opposed to the 45% you may pay as an employee. Come in to see what we can do for!
The tenant or property manager should withhold 25% non-resident tax on your gross rental income, and give you an NR4 slip. He/she must also file an NR4 return. However, you can elect to file a return under section 216 of the Income Tax Act, which would mean that you will be taxes on net rental income. You may even get a refund of the taxes withheld! If you plan on filing under section 216, you can elect to have less non-resident tax withheld, by filing out form NR6. In this case, the 25% tax will be based on net rental income. Form NR6 must be filed each January. Give us a call for more information.