Expats and Property Managers

[Pindy4]

Are property managers generally OK with, and knowledgeable about, remitting the 25% withholding tax on rental income on a monthly basis as required by Revenue Canada (NR4), for non-residents of Canada owning rental property in Canada?

Pindy (Edmonton)

 

[brentdavies]

As a former property manager, who worked with many expats, or non resident taxpayers, we did it, but prefered not to. Some folks are very honest, and filed their paper work on time including paying the tax bill. But there were a few who did not, and Revenue Canada chased after the agent for the owner for the money. So we occassionally were left holding the bag (or having to pay the bill).



There is no course on Non Resident Tax and the rules in any property management course. I learned about NR's in 1990 with a shareholder in an murb syndication for an multi family property. And the client was an international banker, who should have knowen the rules and did not.. He had to file taxes for 6 previous years. He payed a pretty heavy fine for not filing.



Short answer, don't be surprised if your property manager is not aware, and if they are, be prepared for a surcharge to handle the taxes on your behalf.

 

[DavePalmer]

Power Properties specializes in non resident owners and handles all of the requirements of non resident reporting including the NR6 and year end NR4. They will even do the section 216 non resident tax return. Call Jamie Palmer at 403-509-0040 for more information

 

[Pindy4]

Thank you to both.

 

[Nicola]

Hi,



We live overseas and have several property managers in different cities (including Edmonton). They don't always know about the NR tax requirements and sometimes it seems confusing at first. It really isn't anything more than filling out the Undertaking (annually), remitting the tax monthly (like paying a bill) and then providing you with NR4s the following spring.



However, as Brent mentioned, the PM is potentially on the hook for the tax if you don't file your tax return by June 30 of the following year. There has to be an element of trust. Having said that, we've never had a PM refuse to do it.



Nicola

 

[Thomas Beyer]

Any prudent PM should require proof that the non-resident is actually registered with CRA with a non-resident ID .. and that the proper paper work has been filed with CRA to show the actual or estimated profit or loss .. and/or he should do those filings for them (for a fee) via a limited power of attorney.



Otherwise, the PM is potentially liable for 25% of the gross rent, which is the withholding rule for non-registered investors.

 

[Nicola]

If you are an expat Canadian, then there is no non-resident registration - they just use your SIN. If you are not Canadian, the first time you file an NR6 Undertaking, they will issue you a Canadian tax ID#. To my knowledge, there is no registration process.



The NR6 Undertaking, signed by the non-resident and the agent (property manager or whoever is undertaking to pay the NR tax) states the estimated net income (loss) for the property, and this is the basis of the income tax to be withheld and remitted on a monthly basis (25% of net income).



The non-resident, by signing the NR6, is undertaking to file a tax return or else pay the full tax (25% of gross income) plus interest. The agent is a back-up if the non-resident doesn't pay. (The CRA is covering its butt.) I don't think a limited POA would be of any help.