T1159
Income Tax Return for Electing under Section 216
Who Must File
Non-residents of Canada who earn rental income from Canadian real property and elect under Section 216 to file a return and pay tax on net rental income instead of gross.
Deadline
June 30 of the year following the tax year (2 years if no NR6 was filed)
Penalty
Forfeiture of the Section 216 election if filed late without an NR6 in place, resulting in 25% flat tax on gross rents
Step-by-Step Filing Instructions
Ensure an NR6 form was filed and approved by the CRA before rental income was earned.
Gather Canadian rental income and expense records.
Calculate net rental income (gross rent minus deductible expenses).
Complete the T1159 reporting net rental income.
Claim capital cost allowance (CCA) if desired.
Pay tax on net rental income at graduated rates or reconcile withholdings.
File by June 30 if you have an approved NR6 on file.
Tips & Best Practices
The NR6 must be filed before the first rental payment of the year to reduce withholding to 25% of net rent.
Without the Section 216 election, non-residents pay 25% flat tax on gross rental income.
CCA claimed on the T1159 may need to be recaptured upon sale of the property.
Frequently Asked Questions
What is the benefit of the Section 216 election?
It allows you to pay Canadian tax on net rental income (after expenses) at graduated rates, instead of 25% on gross rental income.
Do I need an NR6 to file a T1159?
An NR6 is not required to file the T1159, but without it, the Part XIII withholding is 25% of gross rents and your deadline changes.
Can I claim depreciation on the T1159?
Yes. You can claim CCA (Capital Cost Allowance) on the rental property, but be aware of recapture implications on disposition.
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