Key takeaways
- The default Part XIII rate is 25% of the gross amount
- Tax treaties often cut the rate: for example 15% on dividends and periodic pensions for US residents
- Ordinary arm’s-length interest from a Canadian bank is generally exempt
- Rent is withheld at 25% of gross rent unless you file an NR6 and a section 216 return
- A section 217 election can get back some withholding on pensions, CPP, OAS and RRSP payments
Who this calculator is for
Who this page is for: people who have left Canada (or plan to) and still receive Canadian income: dividends, rent, a workplace pension, RRSP or RRIF withdrawals, CPP or OAS. It is also useful for retirees planning where to live.
How Part XIII tax works
Part XIII of the Income Tax Act puts a flat 25% tax on many payments from Canada to non-residents. The payer (your bank, broker, pension plan, tenant’s agent or Service Canada) withholds the tax and sends it to the CRA. You get an NR4 slip each year showing the income and the tax.
For most people, Part XIII is a final tax. You do not file a Canadian return for this income unless you choose an election. A tax treaty between Canada and your new country can lower the rate. To get the treaty rate, give the payer Form NR301 (or NR302/NR303 for partnerships and hybrid entities).
Income covered includes dividends, rent and royalties, pensions, OAS, CPP and QPP, RRSP and RRIF payments, and annuities. Interest paid to you at arm’s length is generally exempt, unless it is participating interest.
Treaty rates in this calculator
| Income | No treaty | US resident | UK resident |
|---|---|---|---|
| Portfolio dividends | 25% | 15% | 15% |
| Arm’s-length interest | 0% | 0% | 0% |
| Rent (gross) | 25% | 25% | 25% |
| Periodic pension or RRIF | 25% | 15% | 0% |
| RRSP lump sum | 25% | 25% | 25% |
| CPP / QPP and OAS | 25% | 0% | 0% |
Notes: Under the Canada-US treaty, social security benefits such as CPP and OAS are taxed only by the US. UK guidance says pensions, including social security, are taxed only in the country where you live. A RRIF payment counts as “periodic” only up to a limit (generally the greater of twice the minimum amount or 10% of the plan value); amounts above that are a lump sum at 25%. Other treaties differ: many cut portfolio dividends and periodic pensions to 15%, but check the treaty text from the Department of Finance before you rely on a rate.
Section 216 and 217 elections
Section 216 (rent)
If you rent out Canadian property, your tenant or agent must withhold 25% of the gross rent each month and remit it by the 15th of the next month. You can file Form NR6 with your agent (by January 1, or before the first rent payment) so withholding is on net rent instead. You then file a section 216 return by June 30 of the next year and pay tax at normal rates on net rental income. This often gives a much lower total tax.
Section 217 (pensions and benefits)
If most of your income is from Canada, you can choose to file a Canadian return and pay graduated tax on pensions, CPP, OAS and RRSP/RRIF payments instead of the flat rate. This can give a refund when your total income is low. The return is due April 30 of the next year.
Worked examples
- Dividends, US resident: $10,000 of Canadian dividends × 15% = $1,500 withheld. You keep $8,500. The US may give you a foreign tax credit for the $1,500.
- Rent, any country: $2,500 a month gross rent × 25% = $625 withheld each month, $7,500 a year. With an NR6 and $18,000 of yearly expenses, the base falls to $12,000 net.
- RRSP lump sum, India resident: a $40,000 withdrawal is withheld at 25%, which is $10,000, unless the treaty says otherwise. Check the treaty and consider a section 217 return.
Next steps
- Tell every Canadian payer you are a non-resident and give your new address.
- Send Form NR301 to claim a treaty rate.
- Keep your NR4 slips: your new country may let you claim a foreign tax credit.
- If you are still deciding whether to sell your home, read keep or sell your home.
- For OAS and CPP, check you qualify abroad with the OAS abroad checker.
- Back to the leaving Canada tax guide.