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What is an NR6, and do I need one?

Form NR6 is an undertaking filed jointly by you and your Canadian agent. Once the CRA approves it in writing, your agent withholds 25% of your net rental income rather than 25% of gross — a much smaller monthly amount. In exchange, filing a Section 216 return for that year becomes mandatory, and the deadline moves to June 30.

Who this applies to: Non-resident owners of Canadian rental property with a Canadian resident agent.

Key facts
File by
January 1, or before the first rent is due
Effect
25% of net instead of 25% of gross
Until approved
Agent still withholds on gross
Consequence
Section 216 becomes mandatory, due June 30

How it works

Send the NR6 to the CRA on or before January 1 of the year, or before the first rental payment is due. Your agent must keep withholding on gross until the approval arrives in writing.

After approval, the CRA describes the withholding base as 25% of net rental income — "the amount of rental income available after the rental expenses have been paid." That is actual net for the period, not a fixed instalment locked to the estimate you filed. The figures on the NR6 support the approval; they are not the remittance itself.

Without an NR6 you are effectively financing the CRA all year and waiting for the Section 216 refund. With one, the money stays in the property.

Where people get caught

Missing the June 30 deadline after an approved NR6 is the expensive failure. Your election becomes invalid, tax is due on the gross rent for the whole year, and the CRA issues that assessment to your agent — not to you. On $20,000 of gross rent with $5,000 of net, that is an extra $3,750 plus interest landing on the person who did you the favour.

Source: CRA Guide T4144, Income Tax Guide for Electing under Section 216.

Go deeper: CRA Part XIII remittance calculator

Terms used here

NR6Section 216Part XIII tax

Related questions

How do I get the 25% non-resident withholding tax back?
File a Section 216 return. It taxes you on net rental income at graduated rates and the CRA refunds the difference.
Who can act as my Canadian withholding agent?
Any Canadian resident. But the agent is personally liable for withholding that does not happen, so this is not a small favour to ask.
My tenant pays me rent directly. Do I still owe non-resident withholding tax?
Yes — and the legal obligation to withhold and remit sits with whoever pays you, which usually means your tenant.

Frequently asked questions

My expenses changed mid-year. Do I need to file a new NR6?
Not necessarily. Once the NR6 is approved, the CRA's guidance describes withholding as 25% of net rental income after expenses have been paid, so ordinary movement in expenses is already reflected. An amended NR6 is worth considering if the year's picture changes materially from what was approved.
Can I file an NR6 partway through the year?
The NR6 should go in on or before January 1, or before the first rental payment is due. Until the CRA approves it in writing your agent must continue to withhold on gross, so a late NR6 has limited effect for the months already past.

This is general information, not tax or legal advice. Rules change and your situation is specific — verify with the CRA or IRS, or with a cross-border advisor, before acting. ← All answers

BorderBird helps cross-border landlords track rent and prepare CRA NR4 and IRS Schedule E filings — see how it works.