As a nonresident of Canada, you may be subject to the NonResident Section 216 Tax. This tax applies to nonresidents who own Canadian rental property and earn rental income from it.
The purpose of the Section 216 Tax is to ensure that nonresidents pay their fair share of taxes on rental income earned in Canada. It is important to note that this tax is in addition to any taxes you may owe in your home country.
The Section 216 Tax is calculated based on your net rental income earned in Canada. You are allowed to deduct certain expenses related to the rental property, such as property taxes, maintenance costs, and mortgage interest. The remaining amount is subject to a flat tax rate of 25%.
To pay the Section 216 Tax, you must file a Canadian income tax return by June 30th of the following year. You may also be required to make quarterly tax payments throughout the year.
It is important to keep detailed records of all rental income and expenses related to the property, as well as any taxes paid in Canada and your home country. This will help ensure that you accurately calculate your tax liability and avoid any penalties or fines.
In summary, if you are a nonresident of Canada who owns rental property in the country, you may be subject to the NonResident Section 216 Tax. This tax is calculated based on your net rental income earned in Canada and is in addition to any taxes owed in your home country. To ensure compliance, it is important to keep detailed records and file your Canadian income tax return by the required deadline.