Hi
I have a question about late filing of section 216 non-resident returns. I see there is a provision to do this once.
There is very little information on what makes you eligible to do this and what the requirements are.
I last filed the 216 returns for 2001. I have not had a letter from CRA asking me to file.
I have only losses if I can use expenses.
My main reason I did not do this is I did not realize that I had I time limit to be able to claim expenses. Life got in the way (kids came along). I thought since I had a net rental loss that I did not have to file. Had I realized that I would pay tax on gross rent I would have done it. I still own the properties and am now a resident.
Any info or advice would be appreciated.
Thanks
Section 216
Moderator: Mark T Serbinski CA CPA
The tax that you should pay is 25% of the Gross Rent.
This is Part 13 non resident witholding tax under 212(1)(d)i)
The filing of a tax return within 2 years after the end of teh taxation year under Part 1 will allow you to pay tax including the 48% non resident surtax on the Net Rental Income instead of the Gross.
In your case since you have a los no tax under Part 1 will apply.
The CRA will in administration policy allow since 2001 anyone a ONE TIME deal to file late Sec 216 return for any previous years unless
a) The CRA has previously advised you of your responsibility under Part 13 tax or
b) The CRA has initiated activities against the non resident to enforce legislation under the act.
So the fact that you filed a return in 2001 may still allow you to file all arrears returns under 216(1) if the 2001 filing was made within the 2 year time frame and was not late then you have not taken advantage of your one time "Get out of Jail" free turn card. If teh 2001 filing was made on time for that year and you are in arrears for all future years and as you say have not been notified by the CRA then file 2002 to 2010 returns together as 216(1) you have losses its not taxable and you will then be able to file teh 216(1) return again for future years within 2 years so you are not offside. If you do not elect to go for teh Part 13 witholding tax and rely on the sec 216 return thay could access you for ax under Part 13 at 25% of teh Gross but it would be cancelled when you file a sec 216(1) return the most they may do is assesss you for interest on not making the Part 13 witholding but it would not be much. Of cousrse your best bet for now woulf be to file an undertaking to ber taxed on the Net amount and if teh net amount is a loss ( without any CCA) then you simply file a sec 216(1) tax return within 6 months of teh year end and no witholding tax will apply.
In many cases even if tehy assess you interest on teh Part 13 tax witholding and you file a sec 216(1) return showing no tax teh intertest can be challenged under teh court ruling in a case called "Wright" the interest was set aside.
So I would file all my sec 216(1) returns and make an election for the 25% withoulding for the current year on the net amounts.
This is Part 13 non resident witholding tax under 212(1)(d)i)
The filing of a tax return within 2 years after the end of teh taxation year under Part 1 will allow you to pay tax including the 48% non resident surtax on the Net Rental Income instead of the Gross.
In your case since you have a los no tax under Part 1 will apply.
The CRA will in administration policy allow since 2001 anyone a ONE TIME deal to file late Sec 216 return for any previous years unless
a) The CRA has previously advised you of your responsibility under Part 13 tax or
b) The CRA has initiated activities against the non resident to enforce legislation under the act.
So the fact that you filed a return in 2001 may still allow you to file all arrears returns under 216(1) if the 2001 filing was made within the 2 year time frame and was not late then you have not taken advantage of your one time "Get out of Jail" free turn card. If teh 2001 filing was made on time for that year and you are in arrears for all future years and as you say have not been notified by the CRA then file 2002 to 2010 returns together as 216(1) you have losses its not taxable and you will then be able to file teh 216(1) return again for future years within 2 years so you are not offside. If you do not elect to go for teh Part 13 witholding tax and rely on the sec 216 return thay could access you for ax under Part 13 at 25% of teh Gross but it would be cancelled when you file a sec 216(1) return the most they may do is assesss you for interest on not making the Part 13 witholding but it would not be much. Of cousrse your best bet for now woulf be to file an undertaking to ber taxed on the Net amount and if teh net amount is a loss ( without any CCA) then you simply file a sec 216(1) tax return within 6 months of teh year end and no witholding tax will apply.
In many cases even if tehy assess you interest on teh Part 13 tax witholding and you file a sec 216(1) return showing no tax teh intertest can be challenged under teh court ruling in a case called "Wright" the interest was set aside.
So I would file all my sec 216(1) returns and make an election for the 25% withoulding for the current year on the net amounts.
JG