Amounts paid to a non-resident as rent for the right to use property in Canada, including rent for the use of residential real estate, are generally subject to withholding tax. Such amounts must be remitted to CRA.Recent legislative amendments would provide an exception from this withholding requirement in certain cases. The effective date of this change is August 12, 2024. CRA has indicated that they are administering this proposal, even though it has not yet been passed into law (as of January 1, 2026).

Individuals would not have to withhold tax in respect of an amount paid or credited to non-resident persons as rent for the use of a residential property in which an individual resides (whether or not that individual is the one paying the rent). This exception from withholdings also applies where the rent paid was for a residence of a deceased individual, the payment was made within 36 months of the individual’s death and the rent was paid by a graduated rate estate (GRE).

If the exception applies, the non-resident person would be required to remit and report (in prescribed form) the withholding, assuming that an agent of the non-resident was not already required to do so. All rents paid on Canadian real estate to a non-resident that do not fit within the specific terms of these exceptions (e.g. paid by a trust that was not a GRE) would continue to require withholdings and reporting by the tenant.

Real Estate: Nominee or Owner?

In a November 7, 2025 French Court of Quebec case, the taxpayer was assessed with business income of $284,661 in 2015 related to the sale of a house built on land she owned.

The taxpayer argued that she acted as a nominee for her former spouse, who allegedly carried out the project, and, as such, the taxpayer did not need to report the income from the sale (her former husband would have had to report the income). She stated that, to reduce taxes as a couple, the land and the house were put solely in her name as she had little income at the time. While the taxpayer was with her former spouse at the time of the transaction, they separated shortly afterwards.

Revenu Québec (RQ) argued that the taxpayer was the project’s true owner and beneficiary. The house was sold for $545,000, financed with $245,000 in cash and a second house valued at $300,000, which was later resold. The divorce agreement between the taxpayer and her former spouse provided that the net proceeds from the sale of the second house would be split 20.2% to the taxpayer and 79.8% to the former spouse.

Taxpayer loses in court. The Court noted the taxpayer knowingly and actively participated in the project as an owner: the land and property were registered in the taxpayer’s name alone, she applied for and obtained the building permit, she contributed financially to the project and she helped choose material, colour and decor. Further, during the taxpayer’s divorce, she acted as the sole owner and not a nominee. Finally, there was no written or other evidence of a nominee arrangement.

The Court found that the tax planning to minimize the couple’s income tax was a deliberate decision; the taxpayer could not later deny ownership. The Court further found that the taxpayer and her former spouse’s divorce agreement had no effect on the tax treatment of the proceeds of the property. The Court stated that taxpayers should be taxed for what they did, not for what they intended to do. As such, it is not up to the Court nor RQ to apportion the taxable proceeds to the former spouse: it will be up to the taxpayer and her former spouse to take those steps.The Court ruled that the taxpayer was the true owner of the property and therefore should have reported the full gain on the disposition.