Selling Canadian Property: An Overview For Non-Residents
When selling or disposing of Canadian real estate, non-residents must notify the Canadian government within ten days of the completion of the transaction to obtain a certificate of compliance. A certificate of compliance will only be issued if the CRA has received either a prepayment on account of the taxes owing or appropriate security for the prepayment.
On January 1, 2004, the CRA will start charging a financial penalty to non-resident owners of taxable property in Canada who sell that property and do not, within ten days, provide notice of the sale to the CRA.
In other words, CRA is tightening its tax reporting condition for non-residents who own Canadian property and will charge them the greater of either $100 or $25 times the number of days beyond the ten that pass before the sales notice is filed with CRA. For example, if a non-resident sells taxable Canadian property and does not notify CRA until 21 days after the ten-day grace period, that individual will be charged a $525 penalty ($25 x 21 days).
There are exceptions to this new policy, though an accountant or lawyer is best suited to interpret their applicability in a given situation. An individual can also apply to waive or cancel the penalty through a government “fairness committee.”
- Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada, Canada Revenue Agency
- “Tax Obligations Imposed on Non-Resident Vendors Disposing of Real Property in Canada.” Real Estate Update, Lawson Lundell, Fall 2001
Note: The above is provided for informational purposes only and does not constitute professional advice. For more information, consult legal, financial and real estate professionals, as appropriate.
British Columbia Real Estate Association – December 18, 2003 (updated August 4, 2006)