BorderBird
App →
CRA

NR6

Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real Property or Receiving a Timber Royalty

Form NR6 is the CRA application that lets non-resident landlords cut their Part XIII withholding from 25% of gross rent to 25% of net rent (rent minus expected expenses). Filed before January 1 of the year you want it to apply, an approved NR6 typically reduces monthly withholding by 60-70% — preserving cash flow throughout the year instead of waiting for the Section 216 refund.

⚠️ Important Disclaimer

This content is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently — always verify with the CRA and IRS or consult a qualified cross-border tax accountant before making decisions.

Filing deadline

Before the first rental payment of the year (ideally by January 1)

Who must file

Non-resident landlords with a Canadian property manager who want to reduce Part XIII withholding from gross to net rental income

Official resourceCRA official page →

Key Takeaways

  • NR6 cuts withholding from 25% of GROSS rent to 25% of NET rent (rent minus expected expenses) — typically a 60-70% reduction in monthly withholding.
  • File NR6 before January 1 of the year you want it to apply. Late filings are not accepted retroactively.
  • NR6 commits you to filing a Section 216 return at year-end — skipping the Section 216 filing means CRA can reassess and recover the difference between reduced and full 25% withholding.
  • Both you AND your withholding agent (property manager / resident agent) sign Form NR6. CRA reviews projected expenses and either approves or asks for adjustments.
  • Approval takes 30-60 days. Apply early in November / December for January 1 effective date.

Why file NR6?

Default Part XIII withholding on Canadian rental paid to non-residents is 25% of gross rent. On a property collecting $24,000/year of rent, that's $6,000/year withheld — regardless of your actual expenses.

For most landlords with mortgage interest, property tax, insurance, and management fees, actual net rental income is much less than gross — so the 25% gross withholding massively over-collects. The Section 216 return at year-end recovers the excess, but you wait 12-18 months for the refund.

NR6 fixes the cash-flow problem upfront. With NR6 in place, your property manager withholds 25% of net rent (rent minus expected expenses) instead. Monthly withholding drops dramatically; the year-end Section 216 reconciliation is small (or even owes a little).

Concrete numbers: property with $24,000 gross rent and $16,000 expected expenses ($8,000 net):

  • Without NR6: 25% × $24,000 = $6,000 withheld annually ($500/mo)
  • With NR6: 25% × $8,000 = $2,000 withheld annually ($167/mo)
  • Cash flow improvement: $4,000/year stays in your pocket all year

The January 1 deadline

NR6 must be filed before January 1 of the calendar year you want it to apply, OR before the first rent payment for a new property mid-year.

Late NR6 filings are not accepted retroactively. If you miss the deadline, you cannot reduce withholding for that year — you wait until year-end and file Section 216 to claim the over-withheld amount as a refund.

Practical timeline:

  • October-November:Prepare NR6 with projected next-year expenses (use this year's actuals as baseline)
  • Mid-November: Submit to CRA. Allow 30-60 days for processing.
  • By December 31: CRA approval should be in hand. Provide approval letter to your property manager so they apply reduced withholding starting January 1.

How NR6 reduces your withholding

CRA reviews your NR6 and approves a projected net rental income figure (gross rents minus expected deductible expenses). Once approved:

  1. Your property manager / resident agent receives CRA's approval letter
  2. They calculate monthly net rent: monthly gross rent minus monthly share of expected expenses
  3. They withhold 25% of net rent (not gross) and remit to CRA by the 15th of the following month
  4. At year-end, they issue you an NR4 showing the lower withholding amount in box 17

You still file a Section 216 return at year-end to true-up — actual expenses vs projected expenses. The reconciliation is small (because the projection was close), but it's mandatory if you had NR6 in place.

Common NR6 mistakes

  1. Missing the January 1 deadline. Late filings rejected for that year. Section 216 at year-end is still available as recovery path.
  2. Filing NR6 but skipping Section 216. NR6 commits you to year-end filing. Skip Section 216 and CRA reassesses to recover the gap between reduced and full 25% withholding.
  3. Overestimating expenses to reduce withholding aggressively. CRA reviews projections and adjusts if unreasonable. Realistic expense projections get approved smoothly.
  4. Not coordinating with property manager. They need the CRA approval letter to apply reduced withholding. Send it immediately on approval.

Frequently asked questions

When is the NR6 deadline?

Before January 1 of the year you want it to apply, OR before the first rent payment for a new property mid-year. Late filings are not accepted retroactively. Apply in October-November for January 1 effective date (CRA processing takes 30-60 days).

Does NR6 eliminate the need to file Section 216?

No — NR6 commits you to filing Section 216 at year-end. If you had NR6 in place and skip Section 216, CRA can reassess and recover the gap between reduced withholding and full 25%. NR6 reduces cash-flow pain during the year; Section 216 is the year-end reconciliation that closes the loop.

What happens if my actual expenses are different from the NR6 projection?

Your Section 216 return at year-end reconciles actual to projected. If actuals were higher than projected, you get a small additional refund. If actuals were lower (less expenses than projected), you may owe a small balance. Either way, the year-end true-up is small because NR6 already approximated actual tax.

Who signs the NR6 form?

Both you (the non-resident landlord) and your withholding agent (typically your Canadian property manager or appointed resident agent). The agent commits to withholding 25% of net rent rather than gross once CRA approves.

Can I file NR6 for multiple properties?

Yes — one NR6 per property (or one NR6 covering all properties managed by the same agent, depending on CRA's current form structure). Each property's projected net rent is computed separately based on its own expected expenses.

non-residentwithholding reductionNR6net rental income

Simplify your cross-border tax prep

BorderBird automatically tracks your rental income, converts currencies using CRA-approved annual averages, and exports CRA-ready and IRS-ready reports your accountant can use to file NR6 with confidence.

Try BorderBird Free →