Tax on Rental Income
- Canada Customs and Revenue Agency (CCRA) requires non-residents to pay 25% of the gross rental income from the property to CCRA.
- The 25% amount may be reduced by filing a Form NR6 return, which sets out the projected rental income and the expenses associated with the property. A property manager may be able to help you fill out this return.
- Upon filing an NR6 return, the property holder will be required to file an annual tax return with respect to the property. CCRA will only allow expenses to offset the rental income if the returns are filed. Expenses incurred more than two years before the filing of a return will be disallowed.
- Therefore it is important to keep filings current.
- If you intend to furnish your property with items from a home outside Canada it is important to contact Canada Customs in order to find out what their requirements are with respect to avoiding duties on these items.
- Generally, you are permitted one shipment of used personal effects to a recreational residence without being required to pay duty.
- You will be required to show a Form A Transfer form to prove that the items are being brought in to furnish your property. A copy of the form can be obtained from your lawyer.
Annual Tax Returns
- CCRA requires a property holder to file a tax return with respect to all income produced from the property.
- CCRA will only allow expenses from the past two years to offset income from property, so it is important to keep filings current.
Receipts for Furnishings
- If you are purchasing furnishings for your property and intend for those furnishings to be sold with the property, it is important to retain receipts for the furnishings and show evidence that the furnishings are staying with the property.
- This evidence should include documentation from Canada Customs if the furnishings were brought across the border, or invoices showing delivery of the items to the Whistler address if they were purchased somewhere other than Whistler.
- If receipts and other evidence are not retained, CCRA will disallow the deduction of the cost of the furnishings from the sale of the property, increasing the tax payable on a transfer of the property.
|Information provided by Ralph Yetman|