NR6 Form Explained: Its Role and Function in Canadian Income Taxation

Julia Kagan is a financial and consumer journalist, formerly a senior editor specializing in personal finance at Investopedia.

Understanding the NR6 Form

The NR6 Form is an official document issued by the Canada Revenue Agency (CRA) that non-residents must submit to declare their intention to file an income tax return for rental income or timber royalties earned within Canada. This form is often paired with Form NR4, which is completed by payers distributing funds to non-residents.

Key Highlights

• The NR6 is specifically for non-residents receiving rental income or timber royalties from Canadian sources.
• The CRA classifies a non-resident as an individual who spends fewer than 183 days in Canada annually.
• Taxpayers must ensure the NR6 aligns with the NR4 form information reported by those disbursing payments to non-residents.

How the NR6 Form Functions

Non-residents earning rent or timber royalties in Canada are required to file the NR6 Form with the CRA. This filing signals the taxpayer's plan to submit an income tax return for that fiscal year but does not require immediate tax payment. The NR6 must be filed by the first day of the tax year in which payments are expected. Subsequently, individuals must file a T1159 Income Tax Return by June 30 of the following year, while corporations or trusts are obligated to submit a T2 Corporation Income Tax Return within six months after their fiscal year ends.

Additionally, the CRA mandates that non-residents have a Canadian agent responsible for collecting rent or royalty payments. Before NR6 approval, the agent must withhold and remit the applicable non-resident tax by the 15th day of the month following payment. Once the NR6 is approved, the taxpayer may defer withholding taxes until the due date.

Non-Resident Taxpayer Status in Canada

The NR6 Form applies exclusively to non-residents as defined by the CRA—individuals who habitually reside outside Canada or spend less than 183 days annually in the country. Those spending over 183 days without significant residential ties may be deemed residents and taxed accordingly. This classification often includes government employees abroad or individuals present in Canada for extended periods without residency elsewhere.

Tax responsibilities outlined in the NR6 fall under Part XIII of the Canadian Income Tax Act, which covers income types such as rental income, timber royalties, stock dividends, pension benefits, and retirement savings payouts. Typically, non-resident taxpayers face a flat withholding tax rate of 25% on rent and royalties, though tax treaties between Canada and other countries can offer reduced rates or exemptions.

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