Amounts paid to a non-resident as rent for the right to use property in Canada, including rent for the use of residential real estate, are generally subject to withholding tax. Such amounts must be remitted to CRA.

Recent legislative amendments would provide an exception from this withholding requirement in certain cases. The effective date of this change is August 12, 2024. CRA has indicated that they are administering this proposal, even though it has not yet been passed into law (as of January 1, 2026).

Individuals would not have to withhold tax in respect of an amount paid or credited to non-resident persons as rent for the use of a residential property in which an individual resides (whether or not that individual is the one paying the rent). This exception from withholdings also applies where the rent paid was for a residence of a deceased individual, the payment was made within 36 months of the individual’s death and the rent was paid by a graduated rate estate (GRE).

If the exception applies, the non-resident person would be required to remit and report (in prescribed form) the withholding, assuming that an agent of the non-resident was not already required to do so.

All rents paid on Canadian real estate to a non-resident that do not fit within the specific terms of these exceptions (e.g. paid by a trust that was not a GRE) would continue to require withholdings and reporting by the tenant.

ACTION: Review whether rent paid to a non-resident landlord would qualify for this exception from withholding tax.

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