Non-Resident Sale Transaction
Non-Resident Sale Transactions
When a non-resident owner sells Canadian property, Canadian law requires us to holdback 25% of the proceeds of the sale pending filing of a Canadian Income Tax return by the end of the next tax year, including the calculation of Canadian tax owed on any Capital Gain.
Alternatively, the owner may obtain a Section 116 'Clearance Certificate' that should be applied for in advance of the sale. This Certificate can be obtained from any Canada Revenue office. Such Clearance Certificate must be completed by Revenue Canada and submitted to our office prior to closing or the holdback will apply.
Non-resident vendors who fail to notify CRA (Canada Revenue Agency) within the ten-day period will be liable to a penalty under subsection 162(7) of the Act. This penalty is $25 a day for each day the notification is late, with a minimum of $100 and a maximum of $2,500.