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Section 216 vs. 25% Withholding Calculator

For non-resident landlords with Canadian rental property deciding whether to file a Section 216 return.

By default, CRA withholds 25% of your gross rent as a final tax. Filing a Section 216 return lets you be taxed on your net income instead — and refunds the difference. Enter your numbers to see which is cheaper and your estimated 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.

25%
Default withholding
on gross rent (Part XIII)
Net
Taxed under §216
rent minus expenses
+48%
Non-resident surtax
in lieu of provincial tax
Jun 30
§216 deadline
with NR6 · else ~2 years
$

Total rent collected for the year (monthly rent × 12).

$

Mortgage interest, property tax, insurance, repairs, management fees, condo fees.

Enter your annual gross rent to compare the two paths.

How the Section 216 election works

Under Part XIII of the Income Tax Act, rent paid to a non-resident of Canada is subject to 25% withholding on the gross amount, remitted to CRA by the 15th of the following month. That flat tax ignores your expenses — so a landlord who barely breaks even can still lose a quarter of the rent to withholding.

Net income instead of gross

A Section 216 return is a separate, optional filing that elects to be taxed on net rental income — rent minus deductible expenses such as mortgage interest, property tax, insurance, repairs, and management fees. Because the tax on net income is almost always lower than 25% of gross, filing the return refunds the over-withheld amount.

The 48% surtax

On a Section 216 return, the income is taxed at federal rates plus a 48% surtax in lieu of provincial tax, because the rental income is not earned in a province. This calculator uses the 2025 federal brackets and applies that surtax.

NR6 to fix cash flow in-year

If you file Form NR6 before the calendar year begins, your agent can withhold 25% on net rent during the year instead of gross — so you are not waiting until you file to recover the difference. With an NR6 in place, the Section 216 return is then due June 30 of the following year.

Frequently asked questions

Should I file a Section 216 return?
Usually yes, if you have meaningful deductible expenses. Without it, CRA keeps 25% of your gross rent as a flat, final tax. A Section 216 return taxes you on your net income (rent minus expenses) instead and refunds the over-withheld difference — which is almost always lower. File by June 30 of the following year if you had an NR6 in place, or generally within 2 years of the end of the tax year to claim a refund.
How is Section 216 rental income taxed?
At federal tax rates on your net rental income, plus a 48% surtax in lieu of provincial tax (because the rental income is not earned in a province). Deductible expenses — mortgage interest, property tax, insurance, repairs, management fees, condo fees — reduce the income that gets taxed.
What's the difference between NR6 and Section 216?
An NR6 is filed before the calendar year starts and lets your withholding agent take 25% on net rent (instead of gross) during the year, improving your cash flow. Section 216 is the year-end return that reconciles the actual tax and issues any refund. You can file one, the other, or both — NR6 in-year plus a Section 216 return after year-end.
When is the Section 216 deadline?
If you had an approved NR6 in place, the Section 216 return is generally due June 30 of the year following the tax year. Otherwise you generally have up to 2 years from the end of the tax year to file a Section 216 return and claim a refund of over-withheld Part XIII tax.
Why doesn't this calculator use the basic personal amount?
Most non-residents have foreign income and do not meet the rule that 90% of their world income be Canadian-source, so they cannot claim the federal basic personal amount on a Section 216 return. This calculator leaves it out, which is the realistic (and conservative) case. If you do qualify, your Section 216 tax could be lower and your refund larger.

Keep your books Section-216-ready all year

BorderBird tracks every rent payment and expense, computes your Part XIII withholding in real time, and exports a clean T776 — so your Section 216 return is ready when you are.

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Related guides

CRA Withholding Calculator →
Your monthly 25% Part XIII remittance
Section 216 Election →
What it is and how to file
Form NR6 Guide →
Reduce in-year withholding to net
NR4 Slip Guide →
The year-end slip for withheld tax