Non-resident taxes in Canada: A guide for expats

Understanding the difference between immigration status, tax residency, and filing requirements can help you work out whether withholding tax settles your liability or whether you also need to file a Canadian tax return.

Key takeaways

• Your residential ties, time spent in Canada, and any applicable tax treaty can affect whether Canada considers you a resident or non-resident for tax purposes.
• Part XIII tax commonly applies to passive Canadian-source income, such as certain dividends, rents, royalties, and pension payments, and is generally collected through withholding.
• Part I tax can apply to other Canadian-source income, including certain employment and business income and gains from taxable Canadian property, and may require you to file a Canadian tax return.
• Part XIII withholding is often your final Canadian tax liability when the correct amount has been withheld, but exceptions and optional elections can apply.
• Sections 216 and 217 can provide alternative tax treatment in certain circumstances. Depending on your income and situation, making an election and filing a return may reduce your Canadian tax liability.
• Use the right form for your situation. Forms such as NR4, NR6, NR7-R, T1159, and the T2062 series serve different purposes, so check the income or transaction involved and the relevant filing deadline.

Disclaimer: This guide covers rent, pensions, investments, NR4 slips, and selling Canadian property. It was reviewed in August 2026, is for general information only, not tax advice, and shows where to check CRA rules, treaty rates, and next steps.

How to tell if you are a non-resident for tax purposes

Before you look at income rules, check whether Canada still considers you as a tax resident. Your residency status generally depends on your residential ties, time spent in Canada, and the circumstances of living inside and outside the country.

The Canada Revenue Agency (CRA) places particular importance on significant residential ties, including a home in Canada, a spouse or common-law partner, and dependants.

Secondary ties can also matter when considered together, including Canadian bank accounts and credit cards, provincial health coverage, a driver’s licence, personal property, and social ties.

Ask yourself:

• Do you normally live outside Canada on a routine basis?
• Have you given up significant ties such as a home, spouse or common-law partner, or dependants in Canada?
• How many days did you spend in Canada during the tax year?
• Do you still have secondary ties such as Canadian bank accounts, credit cards, a driver’s licence, or provincial health coverage?
• If you could be resident in both Canada and another country, does a tax treaty determine where you are resident?
• If your situation is unclear, have you checked the CRA’s residency guidance, considered Form NR73 if you are leaving Canada or NR74 if you are entering Canada, or sought professional tax advice?

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How Canadian-source income is taxed

Canadian-source income received by a non-resident can fall under different Canadian tax rules.

Part XIII tax generally applies through withholding to certain income such as dividends, pensions, Canadian rental income, and Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) withdrawals.

Part I tax can apply to income such as employment in Canada, business income, and taxable gains from taxable Canadian property.

The standard Part XIII withholding rate is generally 25%, although a tax treaty may reduce the rate for certain types of income. For example, without a reduced rate or an approved NR6, 25% withholding on CAD 1,000 of gross Canadian rental income would mean CAD 250 is withheld before rental expenses are deducted.

Withholding is not always the end of the story. Depending on the income and your circumstances, you may be able or required to file a Canadian tax return, make an election, or claim a refund of excess tax withheld.

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Do you need to file a Canadian tax return?

Whether or not you have to file a Canadian tax return as a non-resident depends on your circumstances.

• Employment or business income in Canada can mean you need to file a Part I return.
• Selling taxable Canadian property can trigger reporting and filing requirements, including rules that may apply around the Section 116 certificate process.
• If you elect under Section 216, you file a separate Section 216 return for eligible Canadian rental income or timber royalties. If the CRA has approved Form NR6, filing that return on time is required.
• Electing under Section 217 for eligible Canadian income, such as certain pension or retirement income, means you must file the appropriate Canadian return by the applicable deadline.
• If you only received income subject to Part XIII tax and the correct amount has been withheld, you generally do not need to file a Canadian return for that income.

Gather your tax slips, including any NR4 slips, details of your country of residence, and the forms and records relevant to your income.

When section 216 or 217 can lower your tax bill

Sections 216 and 217 are separate elections that can sometimes produce a lower Canadian tax bill than simply accepting Part XIII withholding as your final tax.

For example, a non-resident receiving CAD 24,000 in annual Canadian rental income would generally face 25% Part XIII withholding on the gross amount, or CAD 6,000, unless a different rule applies.

If they have CAD 14,000 of eligible rental expenses, a Section 216 election allows Canadian tax to be calculated on the CAD 10,000 net rental income instead, which may result in some of the tax withheld being refunded.

If the CRA approves Form NR6, withholding can instead be based on estimated net rental income during the year. However, the non-resident must then file the required Section 216 return by the applicable deadline.

• Section 216: applies to Canadian rental income from real or immovable property and certain timber royalties, allowing tax to be calculated on net rather than gross income.
• Section 217: applies to certain types of Canadian income, including eligible pension and retirement income, and can result in a lower tax liability than the standard non-resident withholding treatment.

How rental income is taxed for non-residents

Canadian rental income can create a cash-flow challenge for non-residents. Unless the CRA approves Form NR6, the payer or agent generally has to withhold 25% of the gross rent paid or credited to you, even if your actual profit is much lower.

• Confirm who is responsible for withholding and remitting the tax, such as your tenant, property manager, or other Canadian agent.
• Consider filing Form NR6 on or before January 1 of the tax year, or before the first rental payment is due, if you want to request withholding based on estimated net rental income.
• Keep records of deductible expenses, which may include mortgage interest, repairs, property management fees, and property taxes, depending on the expense and circumstances.
• File a separate section 216 return if you want deductible expenses.

:

Writer

Gary Buswell

✍️ Insider Tip

If you expect significant deductible costs, such as mortgage interest, repairs, or management fees, dealing with Form NR6 early can improve cash flow by reducing the amount withheld during the year once the CRA approves it.

How pensions, investments, and NR4 slips fit in

Non-residents need to work out what Canadian-source income was paid or credited, how much tax was withheld, and what appears on the NR4 slip.

Income shown on an NR4 often does not need to go on a Canadian tax return if the correct Part XIII tax was withheld and that tax is final. However, the NR4 can still be important for a Section 217 election where eligible, checking treaty withholding, or supporting a foreign tax credit claim in your country of residence.

• CPP or QPP, OAS, and private pensions in Canada can be subject to Part XIII withholding
• RRSP or RRIF withdrawals can also be subject to Part XIII withholding.
• Dividends and some investment income may also be reported on an NR4 slip.
• The NR4 slip records amounts paid or credited and the tax withheld.

What happens when you sell Canadian property

Selling Canadian property as a non-resident follows a separate compliance process from buying a home in Canada.

1. Check which Section 116 rules and T2062-series form apply to the property.
2. Notify the CRA of the proposed sale or, if you have already sold the property, generally within 10 days of the disposition.
3. Confirm the certificate-of-compliance process and any amount your lawyer or buyer needs to withhold. Without the appropriate certificate, the purchaser can become liable for tax and may withhold part of the sale proceeds.
4. File a Canadian tax return for the year of sale where required to calculate the final tax liability and claim back any overpayment.

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How to claim treaty relief or fix over-withholding

A tax treaty can reduce or eliminate Canadian non-resident withholding tax on some types of income, but the rate depends on the treaty, the type of payment, and your eligibility for the treaty benefit.

Check the CRA non-resident tax calculator alongside the relevant treaty and CRA guidance rather than assuming one reduced rate applies to all income.

If too much Part XIII tax was withheld, you can generally use Form NR7-R to request a refund of the excess. Treaty eligibility still has to be established, including your country of residence and, where relevant, whether you are the beneficial owner of the income.

✅ Confirm your country of tax residence for the payment year.

✅ Check the treaty article and current rate for that income type

✅ Keep beneficial ownership evidence and treaty eligibility, including Form NR301 or equivalent documentation where appropriate.

✅ Compare the tax shown on your NR4 slip with the rate that should have applied.

✅ Use Form NR7-R for excess or incorrectly withheld Part XIII tax, generally within two years after the end of the calendar year in which the tax was remitted.

How to manage tax payments and move money abroad

Once you have arranged your tax situation, you can focus on money management. You may need to pay the CRA from overseas, receive CAD rent or pension income, or send post-tax funds to your country of residence, so fees and exchange-rate differences can affect what finally arrives.

If you already receive income across borders, review some of the best ways to receive money from abroad in Canada.

Wise money transfers can be one practical choice for sending CAD abroad after tax has been handled, with transparent fees, clear exchange-rate visibility, and digital transfer tracking.

• Keep CAD and foreign-currency records for the tax year and the transfer date
• Check whether your bank, broker, or pension payer charges separate outgoing fees
• Compare the full transfer cost, not just the headline fee
• If you are moving net rent, pension income, or sale proceeds abroad, confirm the tax is settled first.

Useful resources

(accessed 31st August 2026)

• Canada Revenue Agency (CRA) – federal tax agency in Canada
• CRA information page for non-residents
• CRA Non-Resident Tax Calculator
• Department of Finance Canada – list of Canadian tax treaties