Many non-residents hold interests in income-producing properties in Canada. In many cases, when they acquire them, they do not obtain proper advice regarding the Canadian tax implications and requirements.

This can be quite costly-in the absence of following certain procedures, a non-resident earning rents from Canadian real estate can be subject to a 25% Canadian tax on GROSS rents (that is, no deduction for related expenses). This can apply even if no profit is being earned from renting the property.

As a general rule, a non-resident who earns rents for the use of Canadian real estate is subject to 25% tax on the gross rents under Part XIII of the Income Tax Act (“the Act”). This is not usually a good result, particularly where there are significant amounts of expenses that pertain to earning that income.

However, it is possible for the non-resident to elect, pursuant to subsection 216 of the Act, to pay Canadian tax on the net rental income, after deducting allowable expenses such as mortgage interest, property taxes, repairs, management fees, etc. If there is any net income remaining, the tax will be payable at graduated rates, similar to those that apply to Canadian residents.

As a general rule, in order for the non-resident to use this method for any year, a special Canadian tax return (form T1159) must be filed within 2 years after the end of that year.

Nevertheless, even if that return will be filed, the tenant paying the non-resident (or, failing that, the non-resident or the collection agent for that non-resident) will still be required to remit 25% of the gross rents to the non-resident. If that amount remitted is more than the actual tax computed on the section 216 return, it will be refunded to the non-resident after the return is assessed by the Canada Revenue Agency (“CRA”).

However, in cases where there is an agent collecting the rents for the non-resident, and an undertaking to file a Canadian tax return (form NR6) is jointly filed with the CRA, the amount remitted to the CRA can be based on 25% of the estimated net cash flow. If the NR6 is filed, the return must be filed within 6 months after the end of the year.

In cases where a non-resident has been collecting rents on Canadian real estate and not remitting any Canadian taxes or filing any returns, they will be subject to 25% Canadian tax on gross rents, plus interest and penalties, if the CRA gets wind of the situation, for any year that ended more than 2 years ago. Such failure to comply will often be unearthed when the non-resident attempts to obtain a tax clearance under section 116 of the Act when the property is sold.

There is no provision in the Act for late filing a section 216 return. However, fortunately, the CRA has an administrative policy of accepting late-filed section 216 returns in cases where the non-resident has never received any communication from it regarding filing tax returns.

CANADA-BASED INTERNATIONAL TAX CONSULTING FOR CLIENTS WORLDWIDE

100% Dedicated To Minimizing Worldwide Tax Liability 

Do you have a challenging international tax problem involving Canada? 

Michael Atlas is widely regarded as one of the leading international tax experts in Canada.

He advises clients worldwide via email, phone, or Skype. You would never have to travel to his Downtown Toronto office.

Michael Atlas’ practice is strictly devoted to high-level tax CONSULTING. He does NOT provide accounting or tax preparation services.

 

RELYING ON THIS GUY’S ADVICE CAN BE DANGEROUS!

Joseph Blow, CPA, Average Accountant

Contrary to what most people think, very few Canadian accountants are real tax experts. Regardless of whether they have a designation (like CA,CGA,CMA, or CPA) or not, the vast majority have only a general knowledge of tax law and practice. That is fine for preparing tax returns, or giving advice on basic routine issues. However, when it comes to complex, unusual matters, very few have what it takes to give proper advice. When it comes to international matters, even most accountants who specialize in tax don’t have the ability, and go to an expert like Michael Atlas.

 

IN LESS THAN 5 MINUTUES HE CAN USUALLY HELP!

Michael Atlas, CPA,CA,CPA (ILL), TEP

That’s right, in less than five minutes from the time that Michael Atlas gets your email message or phone call, he can typically suggest an approach to help with a high-level international tax problem!

Because of Michael Atlas’ unique creative abilities, 40+ years of wide-ranging experience, and encyclopedic knowledge of Canadian tax law, he is uniquely equipped for situations where FAST RESPONSE is demanded.

Why don’t you put him to the test-you have nothing to lose!

Phone (Office): 416-860-9175

Mobile (After-hours): 416-949-7111

Email: matlas@TaxCA.com

michael.atlas3

All information provided is TOTALLY CONFIDENTIAL.

 

YOU NEVER HAVE TO LEAVE YOUR OFFICE!

Wherever you are in the world, you can get complete advice from Michael Atlas without having to leave your home or office.

He has been providing complete advice to clients worldwide via email for over 25 years! Phone or Skype works fine too! However, if you happen to be in Toronto, and want to meet, no problem!

 

WANT TO REMAIN ANONOMOUS?-NO PROBLEM!

All information provided to Michael Atlas remains strictly confidential, as is consistent with the Rules of Professional Conduct of the Institute of Chartered Professional Accountants of Ontario.

However, even with that, some clients wish to remain anonomous. No problem! Michael Atlas can give advice to Mr. or Ms. “X”-he does not need to have a real name. He can just give advice based on hypothetical facts as presented to him.

 

ADVISING ON  A WIDE-RANGE OF ISSUES

Michael Atlas provides FAST, imaginative and creative advice in connection with the following, as well as many, many more areas:

• Emigration from Canada-guidance on saying “goodbye” to Canadian taxes
• Immigration to Canada-planning to minimize exposure to Canadian taxes
• Returning Canadian expats-what to do about assets accumulated offshore
• Offshore trusts-when can you use them and when you cannot
• Offshore corporations-you can save a fortune in the right situation
• International business structures-proper planning is the key to saving taxes
• Using tax treaties-they can be your best friend!
• Planning foreign income-proper planning is the key!
• Tax disputes and objections– he has a great track record in beating the CRA!

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Contact Michael Atlas now to get FAST advice on all of these areas and more!

 

 

THE ONE OF A KIND CANADIAN INTERNATIONAL TAX BLOG

Michael Atlas authors a unique Blog that is totally devoted to Canadian international tax issues. It is the only one of its kind in the world! It now has 108 original articles.

Thousands of readers access its pages every month.

You may read all the pages of the Canadian International Tax Blog through the Blog page of this site.

 

THE OUTSTANDING CANADIAN BOOK ON NON-RESIDENT TAX 

Michael Atlas is widely known across Canada for being the author of the leading book Canadian Taxation of Non-Residents, which is published by Wolters Kluwer (formerly CCH Canadian Ltd). This highly popular book, which is now in its 5th Edition, has been regularly used as a reference by accountants and lawyers in all parts of Canada for over 20 years! (To learn more about, or order, this book, click here.)

He can advise on all issues relating to non-resident taxation, including how to become a non-resident; all the implications and requirements; dealing with Canadian source income; and what to do if a Canadian expat returns.

 

  FAST ADVICE ON DOMESTIC TAX PLANNING TOO

Michael Atlas can also provide FAST advice on a wide-range of high-level domestic tax issues, including

• Estate planning
• Real estate
• General corporate and business tax issues
• Corporate reorganizations

 

CONTACT MICHAEL ATLAS NOW TO GET FAST ADVICE!

You should contact Michael Atlas now for a FAST evaluation of whether and how he can help you. There is no cost or obligation.

 

Phone (Office): 416-860-9175

Mobile (After-hours): 416-949-7111

Email: matlas@TaxCA.com

michael.atlas3

All information provided is TOTALLY CONFIDENTIAL.