Income Tax Act

Marginal note:Alternatives re rents and timber royalties

• 216 (1) Where an amount has been paid during a taxation year to a non-resident person or to a partnership of which that person was a member as, on account of, in lieu of payment of or in satisfaction of, rent on real property in Canada or a timber royalty, that person may, within 2 years (or, where that person has filed an undertaking described in subsection 216(4) in respect of the year, within 6 months) after the end of the year, file a return of income under Part I in the form prescribed for a person resident in Canada for that year and the non-resident person shall, without affecting the liability of the non-resident person for tax otherwise payable under Part I, thereupon be liable, in lieu of paying tax under this Part on that amount, to pay tax under Part I for the year as though

  • (a) the non-resident person were a person resident in Canada and not exempt from tax under section 149;

  • (b) the non-resident person’s income from the non-resident person’s interest in real property in Canada, timber resource properties and timber limits in Canada and the non-resident person’s share of the income of a partnership of which the non-resident person was a member from its interest in real property in Canada, timber resource properties and timber limits in Canada were the non-resident person’s only income;

  • (c) the non-resident person were entitled to no deductions from income for the purpose of computing the non-resident person’s taxable income; and

  • (d) the non-resident person were entitled to no deductions under sections 118 to 118.9 in computing the non-resident person’s tax payable under Part I for the year.

• Marginal note:Idem

  (2) Where a non-resident person has filed a return of income under Part I as permitted by this section, the amount deducted under this Part from

  • (a) rent on real property or from timber royalties paid to the person, and

  • (b) the person’s share of the rent on real property or from timber royalties paid to a partnership of which the person is a member

  and remitted to the Receiver General shall be deemed to have been paid on account of tax under this section and any portion of the amount so remitted to the Receiver General in a taxation year on the person’s behalf in excess of the person’s liability for tax under this Act for the year shall be refunded to the person.

• Marginal note:Idem

  (3) Part I is applicable, with such modifications as the circumstances require, to payment of tax under this section.

• Marginal note:Optional method of payment

  (4) Where a non-resident person or, in the case of a partnership, each non-resident person who is a member of the partnership files with the Minister an undertaking in prescribed form to file within 6 months after the end of a taxation year a return of income under Part I for the year as permitted by this section, a person who is otherwise required by subsection 215(3) to remit in the year, in respect of the non-resident person or the partnership, an amount to the Receiver General in payment of tax on rent on real property or on a timber royalty may elect under this section not to remit under that subsection, and if that election is made, the elector shall,

  • (a) when any amount is available out of the rent or royalty received for remittance to the non-resident person or the partnership, as the case may be, deduct 25% of the amount available and remit the amount deducted to the Receiver General on behalf of the non-resident person or the partnership on account of the tax under this Part; and

  • (b) if the non-resident person or, in the case of a partnership, a non-resident person who is a member of the partnership

    • (i) does not file a return for the year in accordance with the undertaking, or

    • (ii) does not pay under this section the tax the non-resident person or member is liable to pay for the year within the time provided for payment,

    pay to the Receiver General, on account of the non-resident person’s or the partnership’s tax under this Part, on the expiration of the time for filing or payment, as the case may be, the full amount that the elector would otherwise have been required to remit in the year in respect of the rent or royalty minus the that the elector has remitted in the year under paragraph 216(4)(a) in respect of the rent or royalty.

• Marginal note:Disposition by non-resident of interest in real property, timber resource property or timber limit

  (5) Where a person or a trust of which that person is a beneficiary has filed a return of income under Part I for a taxation year as permitted by this section or as required by section 150 and, in computing the amount of the person’s income under Part I an amount has been deducted under paragraph 20(1)(a), or is deemed by subsection 107(2) to have been allowed under that paragraph, in respect of real property in Canada, a timber resource property or a timber limit in Canada, the person shall, within the time prescribed by section 150 for filing a return of income under Part I, file a return of income under Part I, in the form prescribed for a person resident in Canada, for any subsequent taxation year in which the person was a non-resident person and in which that real property, timber resource property or timber limit or any interest therein is disposed of, within the meaning of section 13, by the person or by a partnership of which the person is a member, and the person shall, without affecting the person’s liability for tax otherwise payable under Part I, thereupon be liable, in lieu of paying tax under this Part on any amount paid, or deemed by this Part to have been paid to the person or to a partnership of which the person is a member in that subsequent taxation year in respect of any interest in real property, timber resource property or timber limit in Canada, to pay tax under Part I for that subsequent taxation year as though

  • (a) the person were a person resident in Canada and not exempt from tax under section 149;

  • (b) the person’s income from the person’s interest in real property, timber resource property or timber limits in Canada and the person’s share of the income of a partnership of which the person was a member from its interest in real property, timber resource property or timber limits in Canada were the person’s only income;

  • (c) the person were entitled to no deductions from income for the purpose of computing the person’s taxable income; and

  • (d) the person were entitled to no deductions under sections 118 to 118.9 in computing the person’s tax payable under Part I for the year.

• Marginal note:Saving provision

  (6) Subsection 216(5) does not apply to require a non-resident person

  • (a) to file a return of income under Part I for a taxation year unless, by filing that return, there would be included in computing the non-resident person’s income under Part I for that year an amount by virtue of section 13; or

  • (b) to include in computing the non-resident person’s income for a taxation year any amount to the extent that that amount has been included in computing the non-resident person’s taxable income earned in Canada for that taxation year by virtue of any provision of this Act other than subsection 216(5).

• Marginal note:Election

  (7) Where, by virtue of subsection 216(5), a non-resident person is liable to pay tax under Part I for a taxation year, for greater certainty section 61 is not applicable in computing the non-resident person’s income for the year.

• Marginal note:Restriction on deduction

  (8) For greater certainty, in determining the amount of tax payable by a non-resident person under Part I for a taxation year by reason of subsection 216(1) or 216(5), no deduction in computing the non-resident person’s income or tax payable under Part I for the year shall be made to the extent that such a deduction by non-resident persons is not permitted under Part I.