A non-resident who receives rental income from real property in Canada can ask that withholding agents be allowed to deduct tax on the net amount instead of the gross amount. To do this, the non-resident has to fill out Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property or Receiving a Timber Royalty.

The Canada Revenue Agency (CRA) must receive this form on or before one of the following dates:

• January 1 of the tax year, for which the request applies
• the date the first rental payment is due

For corporations, estates, and trusts with a fiscal year-end other than December 31, the CRA must receive their Form NR6 on or before the first day of their fiscal year.

Although the CRA accepts Form NR6 throughout the year, the effective date for withholding on the net amount will be the first day of the month in which the CRA receives the form. You have to withhold tax on any gross rental income paid or credited to a non-resident before that date. In all situations, when Form NR6 is filed, you still have to report the gross amount of rental income for the entire year on an NR4 slip, Statement of Amounts Paid or Credited to Non-Residents of Canada and use exemption code "H."

Forms and publications

• Form NR4 slip, Statement of Amounts Paid or Credited to Non-Residents of Canada
• Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property or Receiving a Timber Royalty