AL Accounting Inc.

Author: Anike Li, CPA, CGA, CAMS

  • NR4 vs NR6: The Smart Way to Handle Non-Resident Rental Tax in Canada

    Blog · Non-Resident Tax

    NR4 vs NR6: The Non-Resident Landlord’s Guide to Canadian Rental Tax

    Published March 2026 · AL Accounting Inc.

    If you own rental property in Canada but live outside the country, there’s a number you need to know: 25%. Under Part XIII of Canada’s Income Tax Act, every rental payment made to a non-resident is subject to a 25% withholding tax — applied to gross rent, collected monthly, before a single dollar reaches your account.

    On a $3,200/month Metro Vancouver rental — a typical two-bedroom in Burnaby or Richmond — that’s $800 withheld each month, $9,600 a year, regardless of your mortgage, strata fees, property taxes, or management costs. This gap is what the NR4 and NR6 system is designed to manage.

    The good news is there’s a legal mechanism to reduce that withholding to reflect your actual rental profit. But navigating it means understanding two CRA forms — the NR4 and the NR6 — and making an annual election that most non-resident landlords either miss entirely or file once and forget about.

    This guide explains both forms, the three compliance paths available to you, and what the numbers actually look like for a Metro Vancouver property. Whether you’re managing from Hong Kong, the United States, the UK, or anywhere in between, this is the framework you need.

    Why Non-Resident Landlords Face Special CRA Rules

    For Canadian income tax purposes, you are a non-resident if you do not ordinarily reside in Canada. This applies regardless of citizenship — a Canadian passport holder living in Singapore is still a non-resident for tax purposes, as is a permanent resident who has relocated abroad.

    Canada’s Income Tax Act, under Part XIII, requires a withholding tax of 25% to be applied to gross Canadian-source rental income paid to non-residents. This isn’t a year-end filing obligation — the withholding happens every month, on every payment.

    The obligation to withhold and remit falls on the Canadian agent: typically your property manager, but your tenant if you self-manage. Your agent must remit to CRA by the 15th of the month following each rental payment.

    CRA has increased enforcement activity around non-resident rental income in Metro Vancouver in recent years, given the significant proportion of non-resident-owned properties in areas like Richmond, Burnaby, Vancouver West, and Coquitlam. Getting this wrong isn’t just costly — it can trigger penalties, interest, and agent liability.

    What Is the NR4 Slip?

    The NR4 is an annual information slip — similar in concept to a T4 slip for employment income. It’s issued by your Canadian withholding agent (your property manager or, in a self-managed arrangement, your tenant) and summarizes:

    • Gross rental income paid to you during the calendar year
    • Part XIII withholding tax deducted and remitted to CRA
    • Any applicable exemption code (based on a tax treaty, where relevant)

    Your agent is required to file the NR4 Summary with CRA by March 31 of the following year and provide you with a copy of your NR4 slip. You’ll use it as the starting point for any year-end tax filings.

    The NR4 can cover many types of non-resident income — dividends, interest, pensions. This guide focuses exclusively on rental income from real property.

    What If You Don’t Have a Property Manager?

    If you self-manage your Canadian property from abroad, your tenant legally becomes the withholding agent. They’re required to withhold 25% of each rent payment and remit it to CRA — a fact most tenants have never heard of and won’t know until it’s too late.

    If the tenant fails to remit, the tenant is personally liable for the unpaid withholding tax. CRA can pursue them for these amounts, sometimes years after the fact. The non-resident landlord is also exposed to penalties for the uncollected amounts.

    What Is the NR6 Form?

    The NR6 — Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent is the mechanism that shifts your monthly withholding from 25% of gross rent to 25% of estimated net rental income.

    Instead of withholding on your full $3,200 rent cheque, your agent withholds only on the amount remaining after your estimated allowable expenses.

    To elect into the NR6 regime:

    1. You and your Canadian agent complete and submit Form NR6 to CRA
    2. CRA reviews your estimated income and expense schedule for the upcoming year
    3. Once CRA issues an approval letter, your agent withholds 25% of the net estimate

    By filing the NR6, you make a binding commitment: you must file your non-resident tax return (Form T1159 — Income Tax Return for Electing Under Section 216) for that tax year — even if your property runs at a loss for the year.

    ⚠️ Annual Renewal Required

    The NR6 is NOT a one-time filing. It must be submitted and approved by CRA every single year. Use our filing deadline calculator to track your annual NR6 submission deadline. Many non-resident landlords file once, assume it continues automatically, and discover the hard way that their property manager has reverted to gross withholding for an entire year.

    Practical tip: Submit by November 1 each year — CRA can take 6–12 weeks to process. If you wait until December, CRA approval may not arrive before the January rent.

    NR4 vs NR6: Head-to-Head Comparison

    Feature NR4 Path (Default — No NR6) With NR6 Election
    Withholding base 25% of gross rent 25% of estimated net income
    Monthly cash flow Maximum withholding each month Significantly reduced monthly withholding
    Filing commitment None beyond NR4 Must file T1159 (Section 216 return)
    CRA approval required No Yes (allow 6–12 weeks)
    Annual re-filing No Yes — every January
    Year-end recovery Via T1159 (optional) Via T1159 (mandatory)
    Best suited for Low-expense or paid-off properties Properties with high mortgage, strata, management fees
    Risk if overlooked Ongoing overpayment; potential refund lag Agent reverts to gross withholding for entire year

    The NR4 path is the CRA default. If no NR6 is in place and approved, your agent withholds on gross — period. Many non-resident landlords stay on the default path not by choice, but by inaction, and leave thousands of dollars in unnecessary withholding on the table each year.

    The Three Compliance Paths for Non-Resident Landlords

    Understanding your options helps you choose the right strategy — and know what you’re giving up by defaulting.

    Option 1 — Default Part XIII Withholding (NR4 Only)

    Your agent withholds 25% of gross rent monthly and remits to CRA. The NR4 is filed by March 31. The Part XIII withholding is your final tax obligation for the year — no further return required. However, you can elect to file the non-resident tax return to have your rental income taxes based on your net income, and most of the time you will receive a refund (see Option 2).

    When this makes sense: Your property has low rental income, minimal expenses (no mortgage, low strata), you prioritize simplicity, or you’re not yet set up for the NR6 process.

    The downside: You overpay in real time if your property carries significant ongoing expenses.

    Option 2 — Non-Resident Tax Return Without NR6

    Your agent still withholds on gross throughout the year. After year-end, you file your non-resident tax return (Form T1159) to report your actual net rental income and claim your actual expenses. CRA refunds the difference.

    You have up to two years from the end of the tax year to file the tax return without an NR6 on file.

    When this makes sense: You missed the NR6 deadline, or you’re catching up from a prior year.

    The downside: You give CRA an interest-free loan for the year while waiting for the year-end refund.

    Option 3 — Non-Resident Tax Return With NR6 (Optimal for Most Vancouver Foreign Landlords)

    You file NR6, CRA approves the net income estimate, your agent withholds on net income throughout the year, and you file your non-resident tax return (T1159) the following year to reconcile actuals.

    Result: Matched cash flow throughout the year, appropriately sized withholding, and a final true-up that often produces a small refund.

    For Metro Vancouver condo owners carrying a mortgage, paying strata fees, and using a property manager, Option 3 is almost always the optimal choice. The NR6 preparation is straightforward when your expenses are well-documented — and the annual cash flow improvement is material.

    Book a consultation with our Vancouver non-resident tax team →

    The Vancouver Calculation: How Much Does NR6 Actually Save?

    Let’s make this concrete. Consider a 2-bedroom condo in Burnaby, rented at $3,200/month in 2026.

    Without NR6 — Part XIII gross withholding:

    • Monthly withholding: 25% × $3,200 = $800/month
    • Annual withholding remitted: $9,600/year

    With NR6 — estimated monthly expenses: strata $450 + mortgage interest $1,400 + property tax $200 + management (10%) $320 = $2,370/month. Net income: $3,200 − $2,370 = $830/month:

    • Monthly withholding: 25% × $830 = $208/month
    • Annual withholding: $2,496/year

    Annual cash flow improvement: approximately $7,104 per year, or $592 per month.

    Note: This is an estimate. Actual figures depend on your CRA-approved net income schedule. CCA (capital cost allowance) cannot be included in the NR6 estimate — but CAN be claimed on the T1159 year-end return, which typically produces a refund. Consult a CPA for your specific situation.

    ⚠️ The BC Speculation & Vacancy Tax (SVT) Is a Separate Obligation

    If you own property in a BC municipality designated under the SVT — which includes most of Metro Vancouver and several other BC cities — the Speculation and Vacancy Tax is a provincial tax administered by the BC government, entirely separate from CRA’s federal withholding regime. For most foreign owners and satellite families, the SVT rate is 3% of assessed value annually.

    On a $900,000 assessed condo, that’s $27,000/year — potentially far exceeding your annual CRA withholding.

    We can review both your federal withholding and your SVT obligations in a single consultation. →

    Critical Deadlines — and What Happens If You Miss Them

    Form / Action Deadline Consequence of Missing
    NR6 submission January 1 (submit by November 1) CRA cannot approve; agent must withhold on gross for the full year
    Monthly NR remittance 15th of month following payment Graduated penalty up to 10% of unremitted amount; interest accrues
    NR4 return (by agent) March 31 of following year Late filing penalties and interest charged to the agent
    T1159 / Section 216 return (with NR6) June 30 of following year Agent becomes liable for full 25% gross withholding amount
    T1159 / Section 216 return (without NR6) 2 years from end of tax year Right to deduct expenses forfeited; 25% gross withholding becomes final tax
    NR6 annual renewal January 1 of each year Agent reverts to gross withholding for that entire year

    Common Mistakes Vancouver Non-Resident Landlords Make

    1. Treating the NR6 as a one-time filing. It must be renewed every year. Missing a year reverts the full year to gross withholding.
    2. Submitting NR6 too late. Submit by November 1 to ensure CRA approval before the January rent. December filings rarely arrive in time.
    3. Letting the tenant handle CRA remittances without oversight. Tenants rarely know their withholding obligations, and the financial exposure falls on them — but the landlord remains at risk too.
    4. Missing the T1159 deadline after filing an NR6. If you committed to a non-resident tax return by filing NR6 and miss the June 30 deadline, your agent can be held liable for the full gross withholding amount.
    5. Including CCA in the NR6 estimate. Capital Cost Allowance cannot be used in the NR6 expense schedule — CRA will reject it. CCA can be claimed on the T1159 year-end return.
    6. Confusing the BC Speculation & Vacancy Tax with federal withholding. These are entirely separate obligations administered by different levels of government.

    Planning to Sell? A Note on Section 116

    When a non-resident sells Canadian real property, the Part XIII withholding rules no longer apply — but an equally important compliance obligation kicks in under the Income Tax Act.

    After closing, you need to file a clearance certificate with CRA (Form T2062). If no certificate is obtained, the buyer is legally required to withhold 25% of the gross purchase price and remit it to CRA. On a $900,000 Vancouver condo, that’s $225,000 held back at closing.

    We’ve written a detailed guide on this process — including timelines, required forms, and how to avoid the 25% holdback: Non-Resident Selling Property in Canada: What You Need to Know About Tax.

    How AL Accounting Helps Non-Resident Landlords

    Our non-resident landlord services include:

    • NR6 preparation and CRA submission — including the estimated net income schedule reviewed by a CPA
    • Annual T1159 / Section 216 returns — with maximized year-end refunds
    • Property manager coordination — ensuring correct monthly NR remittances
    • BC Speculation & Vacancy Tax review — applying for exemptions where eligible
    • New purchase compliance setup — guidance on obligations before the first rental payment arrives
    • Multi-property portfolio management — for investors with more than one Canadian property

    We advise in English, Mandarin (普通話), and Cantonese (廣東話) — whichever works best for you and your family.

    Book a consultation with our non-resident tax team →

    Frequently Asked Questions

    What is the difference between NR4 and NR6 in Canada?

    The NR4 is an annual information slip — issued by your withholding agent after the tax year — that records gross rent paid and tax withheld. The NR6 is a form you file proactively before the tax year to reduce your withholding from 25% of gross rent to 25% of estimated net income. Think of the NR4 as a record; the NR6 as a cash-flow election.

    When do I need to file an NR6?

    Before January 1 of the tax year, or before the first rental payment — whichever comes first. The NR6 must be refiled every year. Submit by November 1 to ensure CRA has time to approve before January.

    What happens if I miss the NR6 deadline?

    If your NR6 is not approved by CRA before January 1 (or before the first rental payment), your agent must withhold 25% of gross rent for the entire year — there is no retroactive fix. You can still file a T1159 return after year-end to recover the difference, but you lose the cash-flow benefit for that year.

    Do I have to file a T1159 (Section 216 return) if I filed an NR6?

    Yes — filing the NR6 creates a binding obligation to file the T1159 return for that tax year. If you miss the June 30 deadline, CRA can hold your Canadian agent liable for the full gross withholding amount.

    What are the penalties for not remitting non-resident withholding tax on time?

    The ITA imposes graduated penalties on late NR remittances — the penalty increases with the number of days past due, up to 10% of the unremitted amount for amounts 8 or more days late. Interest also accrues. The obligation falls on the agent (property manager or tenant) — but both the agent and the non-resident can be pursued.

    Can CCA (capital cost allowance) be included in my NR6 estimate?

    No. CCA cannot be included in the NR6 expense schedule — CRA will not approve it. However, CCA can be claimed on your T1159 year-end return. This asymmetry means the NR6 withholding is usually slightly higher than your actual tax liability, which is why most T1159 returns result in a refund.

    What is the BC Speculation and Vacancy Tax — and is it separate from CRA withholding?

    Yes — entirely separate. The BC SVT is a provincial tax administered by the BC government, not CRA. For most foreign owners, the SVT rate is 3% of assessed value annually. On a $900,000 condo, that’s $27,000/year. This is in addition to, not instead of, the federal CRA withholding obligations covered in this article.

    Do non-resident landlords in Vancouver need a Canadian property manager?

    You are not legally required to have a property manager. However, without one, your tenant becomes the withholding agent — and most tenants are unaware of this obligation. If the tenant fails to remit, they face personal liability and you face exposure too. For most non-residents, a property manager is the most reliable way to ensure CRA compliance.

    References

    This article is for general informational purposes only and does not constitute tax advice. Tax laws change; consult a qualified CPA before making filing decisions. AL Accounting Inc. does not accept liability for reliance on this content without a formal engagement.

    AL Accounting is a Vancouver-based CPA, CGA, and CAMS-certified accounting firm. We specialize in non-resident tax compliance for Canadian property owners living abroad, including Non-resident tax filings, NR6 filings, and BC Speculation & Vacancy Tax. We serve clients in English, Mandarin (普通話), and Cantonese (广東話).

    Need Help With Non-Resident Rental Tax?

    Book a consultation with our Vancouver non-resident tax team. We handle NR6 filings, Section 216 returns, and BC Speculation & Vacancy Tax guidance.

    Book a Free Consultation

  • BC Budget 2026: Key Tax Changes for CCPCs & Small Business

    Blog · Corporate Tax

    BC Budget 2026: What Changed for Small Business Owners and CCPCs in BC

    Published March 2026 · AL Accounting Inc.

    BC Budget 2026 was tabled on February 17, 2026 — and the headline for most small business owners was reassuring: corporate tax rates didn’t change. But within that stable rate environment, Finance Minister Brenda Bailey’s budget introduced the most significant new tax incentive for BC manufacturers in years, retroactively expanded the SR&ED research credit, raised the lowest personal income tax bracket, and flagged a PST expansion that will add real, non-recoverable cost to every BC business’s accounting bill starting October 1.

    A Canadian-controlled private corporation (CCPC) is a privately held company incorporated in Canada in which Canadian residents — not public companies or non-residents — control more than 50% of the voting shares. If your BC business is structured as a CCPC, the changes in BC Budget 2026 are directly relevant to your planning for this fiscal year.

    Here’s the breakdown that matters.

    BC Small Business Tax Rates in 2026: Unchanged

    The short version: BC corporate tax rates are flat.

    Income Type BC Rate Federal Rate Combined
    Active business income — CCPC, first $500,000 2% 9% 11%
    Active business income — above $500,000 12% 15% 27%
    Investment income — CCPC 12% 38.67% 50.67%

    Sources: CRA Corporation Tax Rates; BC Budget 2026; PwC Canada 2026 rate summaries

    The small business deduction limit stays at $500,000 of active business income per year. The rate stability matters because it sets a predictable foundation for the credits and compensation planning covered in this article.

    New: The BC Manufacturing & Processing Investment Tax Credit

    This is the most significant new incentive in BC Budget 2026 for CCPCs with physical operations. The BC Manufacturing and Processing Investment Tax Credit (BC M&P ITC) is a 15% refundable credit on eligible capital investment in manufacturing and processing assets. Refundable means exactly that: if your corporation has no tax payable, CRA still writes you a cheque.

    How the Credit Works

    • Rate: 15% on eligible capital investment
    • Eligible property: Qualifying buildings, machinery, and equipment used in manufacturing or processing operations in BC
    • Investment window: April 1, 2026 – March 31, 2031 (full 15% rate)
    • Annual credit cap: $300,000, based on the first $2,000,000 of eligible investment in a year
    • Who qualifies: CCPCs with a permanent establishment in BC at any time during the tax year, with active manufacturing or processing activities
    • Associated corporations: The $300,000 annual cap is shared across your associated group — if you have a holding company or sister CCPC, this affects your maximum credit
    • Claim deadline: Must be filed within 18 months after the end of the tax year in which the eligible property became available for use

    Worked Example — Maximum Credit

    A BC CCPC invests $2,000,000 in qualifying manufacturing machinery in Q3 2026.

    BC M&P ITC: $2,000,000 × 15% = $300,000 refundable credit

    Net effective cost (before Capital Cost Allowance): $1,700,000

    Even with no tax payable in that year, the $300,000 is refunded in cash by CRA.

    For a smaller capital purchase:

    CCPC invests $500,000 in qualifying equipment in 2026.

    BC M&P ITC: $500,000 × 15% = $75,000 refundable credit

    Effective after-credit equipment cost: $425,000

    One Risk to Plan Around: Recapture

    If eligible property ceases to be used for M&P purposes in BC before the end of its useful life, you may be required to repay a prorated portion of the credit — calculated based on the property’s fair market value at that time relative to its original capital cost. Asset use planning matters here. If there’s any possibility of repurposing or selling qualifying assets, model the recapture risk before structuring investments around the credit.

    Phase-Out After 2031

    The full 15% rate applies through March 31, 2031. After that, the rate steps down by 2.5 percentage points per year until the credit is eliminated in 2036. CCPCs with capital investment plans should prioritize qualifying BC M&P assets before that phase-out begins to lock in the highest credit rate.

    Source: BC Government — Manufacturing and Processing Investment Tax Credit

    BC SR&ED Tax Credit: Expanded, Capital Restored, and Now Permanent

    The BC Scientific Research and Experimental Development (SR&ED) tax credit was already a meaningful incentive for CCPCs conducting eligible research. Budget 2026 made the credit significantly more accessible — and the changes apply retroactively.

    What Changed

    Before Budget 2026 After Budget 2026
    Expenditure limit (at enhanced 35% federal rate) $3,000,000 $6,000,000
    Capital expenditures eligible? No Yes — restored
    Taxable capital phase-out: lower threshold $10,000,000 $15,000,000
    Taxable capital phase-out: upper threshold $50,000,000 $75,000,000
    Eligible Canadian public corporations (ECPCs) Non-refundable only Now eligible for refundable credit
    Sunset date September 1, 2027 Removed — credit is now permanent
    Effective date — December 16, 2024 (retroactive)

    The BC SR&ED refundable rate for qualifying CCPCs remains at 10%. These changes also align BC with recent federal enhancements under Bill C-15.

    Sources: EY Tax Alert 2026 No. 08; KPMG Highlights 2026 BC Budget

    The Retroactive Window — Your 2025 T2 May Already Qualify

    The enhancements apply to taxation years beginning on or after December 16, 2024. For a CCPC with a January 1 fiscal year start, your 2025 T2 return is covered by the new rules — including the doubled $6,000,000 expenditure limit and restored capital expenditure eligibility.

    SR&ED claims must be filed within 18 months of fiscal year end. For a December 31, 2025 year-end, you have until June 30, 2027 — but earlier filing supports faster review and cash flow recovery from refundable credits.

    If your CCPC carried out any R&D activities in 2025 and hasn’t yet filed a SR&ED claim, this is worth reviewing with your CPA before that filing deadline arrives.

    Federal + BC SR&ED Stack

    The federal SR&ED credit (35% refundable for qualifying CCPCs) stacks directly with the BC credit (10%). On $200,000 of qualifying SR&ED expenditures:

    Federal SR&ED (35%): $70,000

    BC SR&ED (10%): $20,000

    Total refundable credits: $90,000

    Net after-credit cost: $110,000 (before additional deductions)

    A CCPC with both qualifying SR&ED activities and M&P capital investment in the same fiscal year can claim both credits simultaneously — provided the SR&ED capital expenditures and BC M&P ITC capital investments are distinct assets. CPA review is required to confirm treatment before structuring both claims in one year.

    The Personal Tax Changes CCPC Owners Cannot Ignore

    Most Budget 2026 summaries cover this section as a personal tax footnote. For CCPC owner-operators managing salary and dividends, it’s a compensation planning signal — and one that runs out in 2026.

    The Lowest Bracket Increased

    BC’s lowest personal income tax rate rose from 5.06% to 5.60% for the 2026 taxation year, applying to the first $50,363 of taxable income. The BC tax reduction credit increased to $690 to partially offset the impact for lower-income earners; for CCPC owners drawing income above that range, there’s no offset.

    Source: EY Tax Alert 2026 No. 08

    Bracket Freeze 2027–2030: The Planning Window Is Open Now

    Starting with the 2027 taxation year, BC personal income tax brackets and most non-refundable tax credits will be frozen at 2026 levels through 2030 — no indexation for inflation.

    The compounding effect is real: if income grows at even 2–3% annually over that period, the effective tax rate rises in real terms without crossing a new bracket on paper. The freeze is a passive tax increase for anyone with growing income.

    2026 is the last indexed year. That makes compensation decisions made before December 31, 2026 more durable than anything designed after the brackets lock.

    Salary vs. Dividends in 2026: Why This Year Is Different

    For CCPC owner-operators, the annual salary versus dividends question normally turns on a combination of factors: RRSP contribution room (generated by salary, not dividends), dividend tax credit rates, integration with personal marginal rates, and corporate cash flow needs.

    The bracket freeze adds a dimension that hasn’t existed before. The optimal compensation mix in 2026 — when brackets are still indexed — may look different from the mix that makes sense in 2027 when they’re fixed. If your CCPC year-end is approaching, this analysis belongs on the agenda before December 31. If you want the numbers run for your specific situation, that’s exactly the kind of planning session we offer.

    PST on Professional Services: Effective October 1, 2026

    BC Budget 2026 extends the 7% Provincial Sales Tax to several professional service categories, effective October 1, 2026, subject to legislation receiving Royal Assent.

    Services now subject to 7% PST:

    • Security and private investigation services — 7%
    • Rental property and strata management — 7%
    • Architectural, engineering, and geoscience services — 7% on 30% of the purchase price

    PST on these services is non-recoverable for most BC businesses — it’s a direct cost, not a creditable input tax. Every invoice from your accountant or bookkeeper after October 1 will carry this charge.

    We’ll update our engagement letters and invoicing structure before the effective date. If you’d like to understand how this change affects your operating budget, reach out before then.

    Source: BC Government PST Notice 2026-001; BC Budget 2026 Tax Changes

    Your 2026 BC CCPC Action Checklist

    1. Manufacturing or processing operations? Review your 2026 capital plan now for eligible buildings, machinery, and equipment. The BC M&P ITC is available from April 1, 2026 — the earlier you identify qualifying investments, the earlier you can plan around the refundable credit. Confirm eligibility with your CPA before committing capital.
    1. R&D activities in 2025? If your fiscal year started on or after December 16, 2024, the enhanced SR&ED limits apply to that T2 return — including the doubled $6M expenditure limit and restored capital eligibility. Check whether a SR&ED claim has been filed, and if not, whether one should be.
    1. Review your 2026 salary vs. dividends mix before year-end. With bracket indexation pausing from 2027, the compensation structure set in 2026 is likely to be the most favourable it will be for several years. Don’t let this slide to December.
    1. Budget for PST on accounting and bookkeeping fees. Effective October 1, 2026: 7% PST on professional service invoices. Update your operating budget for Q4 2026 and forward into 2027.
    1. Associated corporations with M&P operations? The $300,000 annual BC M&P ITC cap is shared across your associated corporate group. Map your structure before planning capital investments around the credit — one CCPC’s claim reduces what’s available to others in the group.
    1. Life sciences or biotech CCPC? BC Budget 2026 announced plans to consult on a patent box regime in 2026 — a potential lower-tax treatment for profits derived from R&D patented in Canada. Nothing is law yet, but if you’re building an IP portfolio, this consultation is worth tracking.

    Work With a Vancouver CPA Who Knows BC CCPC Tax

    The BC M&P ITC, retroactive SR&ED changes, and the bracket freeze aren’t routine updates — they create real planning opportunities with real deadlines. Missing the BC M&P ITC claim window or failing to revisit compensation before brackets freeze means leaving money on the table.

    At AL Accounting, we work with BC CCPCs on T2 corporate returns, owner compensation planning, SR&ED claim support, and capital investment tax planning. We’re Vancouver-based, and these changes are directly relevant to the clients we work with every day.

    Book a CCPC Tax Planning Session →

    Not ready to book? Download our 2026 BC Tax Calendar to track key filing and planning deadlines through the year, or use our filing deadline calculator for personalized CRA dates.

    Sources: BC Budget 2026 Tax Changes · BC Budget 2026 Highlights · BC Government M&P ITC · EY Tax Alert 2026 No. 08 · KPMG BC Budget 2026 Highlights · CRA Corporation Tax Rates · BC Budget 2026 News Release

    Need Help Planning Around BC Budget 2026?

    Book a consultation with a Vancouver CPA who knows BC CCPC tax inside and out.

    Book a Free Consultation

  • Sold Your Vancouver Property as a Non-Resident?

    Blog · Non-Resident Tax

    Sold Your Vancouver Property as a Non-Resident? Here’s What Happens to That 25% the Government Keeps

    Published March 2026 · AL Accounting Inc.

    Picture this: you’ve accepted an offer on your Vancouver condo. You’re happy with the price. Everything’s moving along — until your lawyer says the words that stop you cold.

    “We’re required to hold back $230,000 at closing. It goes directly to CRA.”

    That’s what happened to Mei, a Hong Kong-based investor who sold her Vancouver condo in 2025. She’d bought it back in 2018 for $680,000. She sold for $920,000 — a solid gain after years of renting it out. And at closing, a full quarter of her sale price was sent to the Canada Revenue Agency before she saw a single dollar.

    She wasn’t in trouble. She hadn’t done anything wrong. This is simply what happens when a non-resident sells Canadian property.

    Here’s the reassuring part: Mei didn’t actually owe $230,000 in tax. Not even close. And if you’re in a similar situation — or planning to sell — this post explains exactly what’s happening, and how to get the overpayment back.

    The Quick Version (If You’re Reading This on Your Phone)

    • CRA withholds 25% of your total sale price at closing — that’s the gross price, not your profit
    • Your actual tax is based on what you gained, not what you sold for — and it’s usually much, much less
    • A Clearance Certificate (also called a Certificate of Compliance by CRA) is what gets you the difference back
    • You almost certainly won’t get the certificate before closing — that’s normal and expected
    • A CPA files the paperwork right after closing to start the refund process

    That’s the big picture. Keep reading and we’ll walk through each piece.

    Why Is 25% Being Held Back at Closing?

    When a non-resident sells Canadian real estate, the buyer’s lawyer is legally required to withhold 25% of the sale price and send it to CRA. They don’t have a choice — it’s the law, and if they skip this step, they become personally liable for the tax.

    This isn’t a penalty. CRA uses this withholding to make sure non-resident sellers pay Canadian taxes before the transaction wraps up. Think of it as a large security deposit held while the government figures out what you actually owe.

    The catch? 25% of the gross sale price is almost always far more than what you’ll actually owe in tax. That gap — often tens or hundreds of thousands of dollars — is what needs to come back to you.

    How Much Do You Actually Owe? (Real Numbers, Simple Math)

    Let’s use Mei’s situation as an example.

    She sold for $920,000. CRA withheld 25%, which is $230,000. She walked away from closing with $690,000 instead of $920,000.

    But Mei’s actual tax isn’t based on the sale price. It’s based on her net gain — the sale price minus what she originally paid, plus improvements and selling costs.

    Here’s how that looks:

    Sale price $920,000
    Original purchase price + costs (ACB) $680,000
    Selling costs ~$28,000
    Net gain ~$212,000

    So Mei’s taxable amount is about $53,000 (25% of the net gain).

    CRA is holding $230,000. She owes around $53,000. That means approximately $177,000 needs to come back to her.

    That’s what the Clearance Certificate is for.

    Numbers above are illustrative. Your actual tax depends on your specific purchase price, improvements, selling costs, and other factors. A CPA will calculate this precisely for your situation.

    How to Get Your Money Back: The Clearance Certificate

    A Clearance Certificate is an official document from CRA confirming what you actually owe in tax. Once it’s issued, the excess withholding is refunded to you.

    Here’s how the process works after closing:

    Step 1 — Your CPA files a form with CRA

    This is the Clearance Certificate application (Form T2062). It tells CRA about the sale, provides your cost details, and asks them to calculate your real tax owing. This form needs to be filed within 10 days of completion of the sale — missing the deadline can mean penalties, so don’t sit on it.

    Step 2 — CRA reviews your file

    CRA reviews your clearance certificate application along with all the documentations your CPA provided with it. Depends the complications of the application as well as if all needed documents are provided, CRA processing time for your filing can vary from three months to nine months.

    Step 3 — CRA issues the certificate

    Once the Clearance Certificate is issued, you pay your actual tax (if it isn’t already covered by the withholding), and the rest is refunded to you. For most sellers, that refund is substantial.

    That’s the process. It’s not instant — but it works, and it’s the only way to recover the overpayment.

    “Why Can’t I Get the Certificate Before Closing?”

    This is the question almost everyone asks. The short answer: you need a finalized purchase and sale agreement just to apply, and CRA takes three to nine months to process the application. Most property closings happen in 30 to 60 days. The timing simply doesn’t line up.

    In about 95% of non-resident property sales, the 25% withholding happens at closing — no exceptions, no workarounds. That’s completely normal.

    The goal isn’t to avoid the withholding. The goal is to file the Clearance Certificate application immediately after closing so your money comes back as fast as possible. Every week you wait is a week CRA is sitting on your funds.

    How Long Until You See the Refund?

    Once your payment is received by CRA, CRA typically takes about 4 to 5 weeks to issue the Clearance Certificate. Total time from closing to refund: typically 4 to 6 months when a CPA manages the process promptly. Without professional help, sellers often wait 12 to 18 months or more.

    The difference comes down to how quickly the paperwork goes in and how good is the paperwork. A complete, well-prepared application moves faster than a rushed or incomplete one.

    What a CPA Handles for You (And Why It’s Worth It)

    This isn’t a simple form you fill out yourself. The Clearance Certificate application requires documentation of your original purchase costs, any renovations, legal fees, and more — and errors or missing information can delay your file by months.

    Here’s what a non-resident tax CPA takes off your plate:

    • Calculates your Adjusted Cost Base (ACB) — your original purchase price plus all qualifying costs and improvements
    • Reviews any prior tax related documents that might affect your file
    • Prepares and files the Application immediately after closing, before the 10-day deadline.
    • Communicates directly with CRA during the review period if any questions come up from CRA, facilitate the payment, as well as following up on the final issuance of the Clearance Certificate.

    Think of the CPA fee as an investment in getting $177,000 back several months sooner. The math is straightforward.

    Where Are You Right Now?

    Planning to sell? Start gathering your original purchase documents now — check our filing deadline calculator for the 10-day T2062 filing window and other key dates. Start gathering legal closing statements, renovation receipts, improvement records. The more organized you are before closing, the faster the the Clearance Certificate can be filed after. If you don’t have a Canadian Social Insurance Number (SIN), apply for a CRA Individual Tax Number (ITN) now — you’ll need it to file.

    Just accepted an offer? Engage a CPA before closing day. Know that 25% will be withheld — plan your cash flow accordingly. Your CPA should be ready to file the moment the deal closes.

    Already closed? Contact a CPA today. The 10-day filing deadline started on closing day. If you’ve passed it, you’re not out of options — but every day you wait adds to the delay in getting your money back.

    Frequently Asked Questions

    What is a Clearance Certificate and why do I need one?

    A Clearance Certificate (also called a Certificate of Compliance) is an official document from CRA that confirms how much tax you actually owe on the sale. Without it, the buyer’s lawyer is required to hold the full 25% withholding indefinitely — the certificate is the legal release that gets your overpayment refunded.

    How long does a Clearance Certificate take to get?

    CRA typically takes three to nine months to process the application, depending on the complexity of your file and how complete your documentation is. Once your CPA files a thorough, well-prepared application right after closing, the process moves as fast as CRA allows.

    What happens if I miss the 10-day filing deadline?

    Missing the deadline doesn’t mean you lose your refund, but it can mean penalties and interest on amounts owing. Contact a CPA immediately — the sooner the application goes in, the better, and a CPA can assess whether any late-filing relief applies to your situation.

    What is the withholding rate for non-residents selling Canadian property?

    The default rate is 25% of the gross sale price for residential property. This is withheld by the buyer’s lawyer at closing and sent directly to CRA — it’s based on the full sale price, not your profit, which is why the refund at the end is often substantial.

    Talk to a Vancouver CPA Who Specializes in Non-Resident Property Tax

    The Clearance Certificate process is manageable — but it moves fastest when the right person handles it from day one.

    At AL Accounting Inc., we guide non-resident property owners through every step: calculating your ACB, filing the Clearance Certificate, working with CRA, and recovering your overpayment as quickly as possible.

    Our founder Anike, CPA, CGA, CAMS has helped clients from Hong Kong, mainland China, Taiwan and across the Asia-Pacific region navigate the sale of their Canadian properties. We speak English, Mandarin, and Cantonese — because tax paperwork is stressful enough without a language barrier.

    Book a consultation with AL Accounting →

    Not ready to book? Send us a message with your question — we respond within one business day.

    AL Accounting Inc. | Burnaby, BC | al-accounting.com

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