In This Article:
- What Is an NR4 Slip Ontario?
- Why Canada Withholds 25% of Rent
- How Property Managers Help Non-Resident Landlords
- What to Do With Your NR4 Slip
- Can You Get a Tax Refund?
- Filing a Section 216 Return
- Frequently Asked Questions
Owning a rental property in Ontario while living outside of Canada is more common than most people assume. We work with landlords based in the United States, the United Kingdom, the UAE, and across Asia who hold long-term residential rentals in cities like Belleville, Cobourg, Oshawa, and Trenton. For many of them, the first time they hear the words "NR4 slip" is when their property manager mentions it, or when a tax deadline is already approaching.
If that sounds familiar, you are not alone, and you are not in trouble. The NR4 slip is simply a Canadian tax information slip that documents rental income paid to a non-resident. Understanding what it means, what your obligations are, and how to use it correctly can save you money and keep you on the right side of the Canada Revenue Agency (CRA). This guide walks through the entire process in plain language, with Ontario-specific context built in throughout.
At Blue Anchor, we manage long-term residential rental properties across Central Ontario, and we deal with non-resident landlord tax compliance regularly. We are not accountants, and nothing in this article is a substitute for advice from a Canadian tax professional. But we can give you a clear, grounded overview of how the NR4 slip works and what steps you need to take.
What Is an NR4 Slip Ontario?
An NR4 slip is a tax information slip issued by the Canada Revenue Agency (CRA) to document amounts paid or credited to non-residents of Canada. If you are a foreign property owner collecting rental income from an Ontario property, your property manager or the person responsible for remitting your rent is required to issue you an NR4 slip at the end of each tax year.
The slip shows two key figures: the gross rental income paid to you during the year, and the amount of non-resident withholding tax that was deducted and remitted to the CRA on your behalf. Think of it as the non-resident equivalent of a T4 slip, which is what Canadian employees receive from their employers. The NR4 is your official record of what was earned and what was withheld.
The slip itself includes your name, your country of residence, your Canadian Individual Tax Number (ITN) or Social Insurance Number if you have one, the income type code, and the amounts withheld. It is issued by whoever made the payment to you, which in most cases is your property manager. At Blue Anchor, we coordinate this process for our non-resident clients and ensure the correct amounts are being tracked and remitted throughout the year so there are no surprises in February.
Why Canada Withholds 25% of Rent
Under Part XIII of the Income Tax Act, Canada requires that 25% of gross rental income paid to a non-resident be withheld and remitted to the CRA. This is not a penalty. It is a withholding mechanism that ensures the Canadian government collects tax on income earned in Canada, even when the owner lives abroad.
The obligation to withhold falls on the payer, which is typically the property manager or, if there is no manager, the tenant themselves. This is an important point that surprises many foreign landlords: if you are collecting rent directly from a tenant in Ontario without a property manager, your tenant is technically required to withhold 25% of the rent and remit it to the CRA on your behalf. In practice, most tenants have no idea this rule exists, which creates a compliance risk for the landlord, not the tenant.
The 25% withholding applies to gross rent. So if your Belleville property earns $2,000 per month in rent, $500 would be withheld each month, leaving you with $1,500. Over a full year, that is $6,000 remitted to the CRA on your behalf. However, as we will explain below, you may be able to recover a significant portion of that through a Section 216 tax return.
Some countries have tax treaties with Canada that reduce the withholding rate below 25%. For example, under the Canada-US Tax Convention, the rate may be reduced to 15% for certain types of income. Your tax advisor can confirm whether your country of residence has a treaty with Canada and whether it applies to rental income.
How Property Managers Help Non-Resident Landlords
Managing withholding tax compliance from another country is genuinely difficult. The CRA requires monthly remittances, proper registration, and year-end reporting. Errors in this process can result in interest charges and penalties. This is one of the most practical reasons why non-resident landlords benefit from working with a local property manager who understands the requirements.
At Blue Anchor, we work with non-resident landlords across our service areas including Belleville, Trenton, Cobourg, Oshawa, and Picton. When we take on a non-resident client, part of our onboarding process involves confirming their residency status and coordinating with their Canadian accountant or tax representative to ensure withholding is handled correctly from day one.
Our onboarding is handled through a structured automated process. Once you agree to partner with us, we send you the Property Management Agreement for e-signature, followed by a detailed onboarding form that captures your property details, banking information for owner draws, existing tenant information, and any active legal matters. This form also prompts you to identify your residency status so we can flag the NR4 requirements early.
Beyond tax administration, we handle tenant screening, rent collection, maintenance coordination, lease administration, and property inspections. For non-resident landlords who cannot be present in Ontario to manage day-to-day issues, this full-service approach is not just convenient, it is often essential. You can read more about how we approach tenant screening at Blue Anchor if you want to understand how we protect your investment from the start.
We collect rent via Interac e-Transfer and Pre-Authorized Debit (PAD), and we pay owners by the 15th of the same month rent is collected. That is faster than most property management companies in Ontario, which typically pay on the 10th of the following month. You can learn more about our owner draw schedule and why it matters for your cash flow planning.
What to Do With Your NR4 Slip
Once you receive your NR4 slip, typically in February following the tax year, there are a few things you need to do. First, verify the information is accurate. Check that the gross income figure matches what you know was collected, and that the withholding amount is correct. If there are discrepancies, contact your property manager or the issuing party immediately.
Second, provide the NR4 slip to your Canadian tax representative. If you do not already have a Canadian accountant or tax preparer, this is the time to find one. Non-resident tax returns in Canada have specific filing requirements that differ from resident returns, and the rules around rental income are particularly detailed. A tax professional who understands Part XIII and Section 216 of the Income Tax Act is worth the cost.
Third, determine whether you want to file a Section 216 return. This is optional but often financially beneficial, and we explain it in detail below. The deadline for filing a Section 216 return is generally June 30th of the year following the tax year, though you should confirm current deadlines with your accountant.
Keep a copy of your NR4 slip for your records, along with documentation of all rental-related expenses for the year. If you plan to file a Section 216 return, those expense records will be critical to reducing your taxable income and potentially recovering a portion of the tax withheld.
Can You Get a Tax Refund?
Yes, and this is where the NR4 slip becomes genuinely valuable rather than just a compliance document. The 25% withholding is calculated on gross rental income, meaning the full rent collected before any expenses are deducted. But your actual taxable income from the property is net income, after deducting allowable expenses like property management fees, repairs and maintenance, insurance, property taxes, mortgage interest, and depreciation.
In many cases, especially for properties with significant expenses or mortgage interest, the net rental income is substantially lower than the gross. That means the 25% withheld on gross rent may be more than what you actually owe in Canadian tax. By filing a Section 216 return, you can calculate tax on your net income instead, and receive a refund of the difference.
As a simple example: if your Ontario property collected $24,000 in gross rent for the year and $6,000 was withheld at 25%, but your allowable expenses totalled $18,000, your net rental income would be $6,000. The Canadian tax on $6,000 at applicable rates would be considerably less than $6,000, meaning you would receive a refund of the overpayment.
This is not a loophole. It is the intended design of the system. The withholding tax is a deposit, not a final assessment. The Section 216 return is how you true it up. Many non-resident landlords leave money on the table simply because they do not know this option exists or they miss the filing deadline.
It is also worth noting that if you are tracking your rental property finances carefully, you may want to look at our overview of tax deductions for rental property owners in Ontario, which covers many of the expenses that can reduce your taxable rental income.
Filing a Section 216 Return
A Section 216 return is a special Canadian income tax return available to non-residents who earn rental income from Canadian property. It is filed separately from any other Canadian return you might have, and it is specifically designed for this situation. Filing it is optional, but as explained above, it is often the right financial decision.
To file a Section 216 return, you will need your NR4 slip, a record of all rental income received, and documentation of all deductible expenses. The return is filed with the CRA, and you will need a Canadian Individual Tax Number (ITN) if you do not already have a Social Insurance Number. Your accountant can help you apply for an ITN if needed.
There is also an alternative approach called the Section 216 election, which allows you to elect to have tax withheld on net rental income rather than gross income from the start of the year. Under this approach, you apply to the CRA for permission to remit 25% of net rent rather than gross rent each month. This reduces the cash flow impact during the year and eliminates the need to wait for a refund after filing. Your property manager and accountant need to coordinate to make this work, but it is a practical option for landlords with significant ongoing expenses.
The CRA provides detailed guidance on non-resident rental income in Information Circular IC77-16 and in the NR4 guide. These are technical documents, but your accountant will be familiar with them.
At Blue Anchor, we are not tax advisors, but we do make sure our non-resident clients have the documentation they need throughout the year. Accurate rent records, expense tracking, and clear communication with your accountant are the foundation of a clean Section 216 filing. If you are curious about how we handle the financial side of property management more broadly, our post on the owner draw schedule gives a good overview of how we keep your finances organized and predictable.
Ontario-Specific Considerations for Non-Resident Landlords
Beyond the federal tax requirements, non-resident landlords with Ontario properties need to be aware of provincial rules that affect how their properties are managed. The Residential Tenancies Act (RTA, 2006) governs all long-term residential rentals in Ontario, and it applies equally whether the landlord lives in Belleville or Bangkok.
Under the RTA, tenants have strong protections, and landlords must follow specific procedures for rent increases, maintenance obligations, and any attempt to end a tenancy. The 2026 rent increase guideline is 2.1%, meaning landlords cannot raise rent on existing tenants by more than 2.1% without applying for an above-guideline increase through the Landlord and Tenant Board (LTB). If you are not familiar with how this works, our post on above-guideline rent increases in Ontario is a useful starting point.
Bill 60, the Fighting Delays, Building Faster Act, 2025, introduced changes to LTB processes that affect how disputes are handled and how quickly certain applications are processed. For non-resident landlords who cannot attend LTB hearings in person, having a local property manager who can coordinate representation is particularly valuable.
One practical note on rent collection: under the RTA, landlords cannot require tenants to pay by post-dated cheques or Pre-Authorized Debit. Tenants must consent voluntarily to PAD arrangements. At Blue Anchor, we offer both Interac e-Transfer and PAD as payment options, and we handle the consent documentation properly so there are no compliance issues.
Frequently Asked Questions
Do I need an NR4 slip if I only own one rental property in Ontario?
Yes. The NR4 slip requirement applies to all non-resident landlords earning rental income in Canada, regardless of how many properties you own. If you received rental income from a Canadian property while living outside Canada, the payer was required to withhold 25% and remit it to the CRA, and you should receive an NR4 slip documenting that activity.
What if my property manager did not withhold the 25%?
This is a compliance issue that can result in penalties for the payer, and potentially for you as the non-resident owner. If you discover that withholding was not done correctly, contact a Canadian tax professional immediately. The CRA has processes for voluntary disclosure that can reduce penalties in some circumstances, but acting quickly is important.
Can I deduct property management fees when filing my Section 216 return?
Yes. Property management fees are a legitimate deductible expense when calculating your net rental income for a Section 216 return. Other deductible expenses typically include repairs and maintenance, property insurance, property taxes, advertising costs, and mortgage interest. Keep all receipts and invoices throughout the year.
Do I need a Canadian bank account to receive my rental income?
Not necessarily. At Blue Anchor, we can arrange owner draws by wire transfer for non-resident clients. However, having a Canadian bank account can simplify the process and reduce transfer fees. This is something to discuss with your property manager during onboarding.
What happens if I sell my Ontario rental property as a non-resident?
The sale of Canadian real estate by a non-resident triggers a different set of CRA requirements, including a Certificate of Compliance (Form T2062) that must be filed before or shortly after closing. This is separate from the NR4 and Section 216 process, and it requires its own tax planning. Speak with a Canadian tax professional well before you list the property for sale. For general context on capital gains considerations, you may find our post on Ontario landlord capital gains tax planning a useful starting point.
Working With Blue Anchor as a Non-Resident Landlord
At Blue Anchor, we have built our processes specifically for landlords who are not always present in Ontario. Our automated onboarding captures everything we need upfront, our monthly reporting keeps you informed, and our owner draw schedule means you receive your net rental income by the 15th of each month rather than waiting until the following month. We coordinate with your accountant on documentation, and we make sure your property is managed in full compliance with the Residential Tenancies Act regardless of where you are in the world.
If you own a long-term residential rental property in Belleville, Trenton, Cobourg, Oshawa, Quinte West, or Picton and you are managing it from abroad, we would be glad to talk. The NR4 slip is just one piece of a larger compliance picture, and having the right team on the ground in Ontario makes all of it more manageable. Reach out to us at blueanchorpm.rent to learn more about how we support non-resident landlords across Central Ontario.
Disclaimer: This article is for general informational purposes only and does not constitute tax or legal advice. Non-resident tax obligations in Canada are complex and fact-specific. Please consult a qualified Canadian tax professional for advice tailored to your situation.
