If you’re a non-resident earning rental income from Canadian properties, filing a Section 216 return can help you report net rental income and claim deductions. However, you may not always receive an NR4 slip, which reports the income paid to non-residents and the withholding tax deducted. In such cases, GTA Accounting, a trusted tax service provider, can prepare an NR4 Pro Forma letter, which will be annexed to your Section 216 return.

Here’s a comprehensive and thorough checklist for non-residents to ensure a successful Section 216 filing, even if you don’t have an NR4 slip. By following this checklist and providing the necessary information, you can be confident in your preparation for the filing process.

What is an NR4 Slip?

The NR4 slip reports income paid or credited to non-residents of Canada and the amount of tax withheld. It is typically issued by the tenant, property manager, or withholding agent. The slip records the gross rental income and withholding tax, which is necessary for filing a Section 216 return.

For more information about NR4 slips, visit the CRA’s NR4 information page.

How GTA Accounting Handles Section 216 Returns Without NR4 Slips

If you do not receive an NR4 slip, GTA Accounting will prepare an NR4 Pro Forma letter, a substitute document outlining the gross rental income earned and estimated withholding tax. This letter will include your Section 216 return to provide the CRA with the necessary income details.

Checklist for Filing a Section 216 Return Without NR4 Slips

To ensure a smooth filing process, please provide the following information and documents:

1. Proof of Non-Residency

Establish your non-residency status with the CRA by providing the following:

A Certificate of Residency from your home country’s tax authority.
A copy of your passport or national ID.

This documentation confirms that you are a non-resident for Canadian tax purposes.

2. Details of Rental Property

Include detailed information about the rental property in Canada:

Full property address.
Date of acquisition and purchase price.
If applicable, information about joint ownership includes co-owners and their respective shares.

These details are crucial for determining allowable expenses and calculating net rental income.

3. Gross Rental Income Records

Since the NR4 slip is unavailable, provide alternative documentation of the gross rental income received during the tax year. This can include:

Monthly or annual rental statements from property managers.
Bank statements showing rental deposits.
Invoices or other proof of rental income.

Accurate records of rental income are essential for preparing the NR4 Pro Forma letter.

4. Withholding Tax Records (if any)

If any withholding tax has been remitted, provide proof, such as:

Bank transfer receipts showing remittances to the CRA.
Correspond with tenants or property managers to confirm withheld amounts.

This information helps us estimate the total withholding tax for the NR4 Pro Forma letter.

5. Property-Related Expenses for Deductions

Provide records of expenses related to the rental property, such as:

Property management fees
Maintenance and repair costs
Insurance premiums
Mortgage interest
Property taxes
Advertising costs

Proper documentation of these expenses allows us to calculate net rental income and claim the deductions accurately.

6. Authorization to Represent (Form T1013)

To authorize GTA Accounting to represent you during the filing process, complete Form T1013. This authorization allows us to communicate directly with the CRA and manage all aspects of your Section 216 return, including the NR4 Pro Forma letter.

7. Banking Information for Refunds

If you’re eligible for a refund, provide your banking information to facilitate direct deposit:

Bank name and branch address.
Account number and institution number.
Any relevant routing information for international transfers.

This ensures that any tax refunds are deposited directly into your account immediately.

How GTA Accounting Prepares an NR4 Pro Forma Letter

If you don’t have an NR4 slip, we will prepare an NR4 Pro Forma letter based on the gross rental income and estimated withholding tax. This letter will be attached to your Section 216 return, providing the CRA with a substitute document to review your rental income and tax status.

The NR4 Pro Forma letter includes:

Gross rental income for the tax year.
Estimated withholding tax remitted (if applicable).
An explanation of why an official NR4 slip was not provided.

This approach ensures compliance with CRA requirements and supports the accuracy of your Section 216 return.

Benefits of Filing a Section 216 Return with GTA Accounting

Accurate reporting: We ensure that your rental income and expenses are reported accurately, maximizing eligible deductions.
Compliance with CRA: The NR4 Pro Forma letter is a substitute when NR4 slips are unavailable, ensuring your Section 216 return meets CRA requirements.
Potential tax refund: Filing a Section 216 return allows you to claim deductions and potentially receive a tax refund if the withholding tax exceeds the tax owed on net rental income.

Conclusion

If you’re a non-resident earning rental income in Canada but lack NR4 slips, filing a Section 216 return is still possible with the help of GTA Accounting’s NR4 Pro Forma letter. By following this checklist and providing the necessary information, you can ensure a successful filing and compliance with CRA requirements.

Remember, GTA Accounting is here to support you every step of the way. If you have questions about filing a Section 216 return or need assistance preparing an NR4 Pro Forma letter, don't hesitate to contact us. We're here to help.

Checklist for Non-Residents Filing Section 216 Returns Without NR4 Slips