CRA indicates that, absent s. 216(4) elections, Canadian rents paid to a non-Canadian partnership are subject to full withholding notwithstanding Canadian partners

Consistently with earlier statements (see, for example, 30 October 1997 T.I. 971673), CRA considers that the full amount of rent paid by a Canadian tenant to a non-Canadian partnership is subject to Part XIII withholding notwithstanding that some of the partners are Canadian residents: there is no indication that an advance waiver can be obtained to reduce the Part XIII withholding.

The non-residents can elect under s. 216(4), so that an agent can collect the gross rents from the tenant and withhold non-resident tax at 25% on the net rental income.  CRA states that although "the appointment of the agent… technically does not release the tenant from the requirement to withhold Part XIII tax," it accepts that the tenant normally is not required to withhold in this situation.

Neal Armstrong.  Summaries of 27 March 2013 T.I. 2012-0450491E5 under ss. 212(13.1)(b) and 216(4).