Do I need to file a Canadian return if tax is already withheld on my rent?
Not necessarily. Withholding on the gross rent can stand as your final Canadian tax on that income, and if you leave it there no return is required. The elective return is a choice, and for most owners it is the better one, because it works the tax out on the net rental income at graduated rates rather than on every dollar of rent received. Where the property carries a mortgage, property taxes, insurance and ordinary repairs, the two outcomes are usually a long way apart. Where the rent is small and the costs are negligible, accepting the withholding as final is a defensible decision rather than a lazy one.
Can tax be withheld on my net rent instead of the gross rent?
Yes, through an undertaking given before the year begins, in which the expected income and expenses are set out and a Canadian agent undertakes to file for you. Once it is accepted, the amounts remitted through the year are calculated on the net rather than the gross, so cash is not tied up with the authority for a year at a time. It has to be in place ahead of the year in question, and it commits you to filing the elective return for that year. For a mortgaged property it is the single most useful thing to arrange in advance.
I missed the deadline to reduce my withholding, can I fix last year?
The undertaking cannot be backdated. For a year that has already begun without one, the remittances stay computed on the gross rent and nothing changes that after the fact. What is still open is the elective return for that year, which works the liability out on the net rental income, so the excess taken at source comes back through the return instead of through the withholding. The undertaking can then be arranged for the following year. Treating the two as one thing is the common error: the first only ever works prospectively, the second is how a past year is corrected.
What expenses can I claim on a non-resident rental return?
The ordinary costs of earning the rent: mortgage interest, property taxes, insurance, repairs, condominium fees, letting and management fees, utilities you pay. Interest is deductible while the principal repayment is not, which surprises owners who think of the whole mortgage payment as a cost. Work that restores the property is a current expense while work that improves or extends it is capital and is treated differently, so invoices need to describe what was actually done. None of this reaches the withholding, which ignores costs entirely. It only has effect on the elective return, which is the point of filing one.
Can I recover the tax withheld on my gross rent?
Only by filing, and only for a year whose own deadline has not passed. The authority does not revisit what was taken at source, so the excess is not adjusted where it was collected; it is dealt with in the computation on the elective return, which sets the tax on the net rental income against what was remitted on the gross. The difference on a mortgaged property is often substantial. Each year stands separately with its own deadline, which is why owners who have let a string of years go by usually find some are still open to them and others are not.
My rental lost money last year, should I still file the elective return?
Usually yes, and for two reasons. Tax was remitted through the year on the gross rent regardless of the loss, so without the return the authority keeps tax on income you did not make. Filing also puts the loss on the record for the property rather than leaving it undocumented, which matters when a later year is profitable or the property is eventually sold. A loss year is also the year in which the interest and repair figures are largest, so it is the year the supporting invoices most need to be assembled properly.
Do I pay tax when I inherit property abroad?
The inheritance itself is often not income to you, but three other things can create tax: the estate may owe tax where the deceased or the property was situated, some countries tax the recipient directly, and the gain from the date you inherit to the date you sell is yours. Reporting obligations can also attach to holding the asset. See inheriting property abroad.
When does my Canadian tax residency actually end?
On the day your residential ties are severed, which is a question of fact rather than of the date on the boarding pass. The CRA weighs the significant ties first — a dwelling available to you, a spouse or common-law partner, and dependants in Canada — then secondary ties such as licences, memberships, accounts and provincial coverage. Keeping a home available while your family stays is the pattern that most often means residency never ended at all. See departure tax on leaving Canada.
