The problem? If you are a Non-Resident of Canada and you want to sell property in Canada, you’re going to need a Certificate of Compliance. You need to request this from the Canada Revenue Agency, and there are some pretty strict deadlines.
The solution?We’re here to help you complete the request forms to get you a Certificate of Compliance, so that your sale can close smoothly and on time.
We’ve outlined the steps involved below, to give you an idea of what we’ll be doing.
Certificate of Compliance When Selling a Property in Canada
Step 1: Apply for a Canadian tax number
Do you already have a Social Insurance Number (SIN) or an Individual Tax Number (ITN)? If yes, you can proceed to step 2.
If not, you will need to complete form T1261 Application for an ITN for Non-Residents.
It is very critical that the instructions on page 2 are followed precisely, or you can expect to have the documents returned to you.
Step 2: Request the Certificate of Compliance
Applying for the Certificate of Compliance needs to be done no later than 10 days after the sale is completed. Form T2062 must be completed. You will need to calculate your gain on the property, and submit the form together with a payment equal to 25% of the gain. The Canada Revenue Agency will review your calculations, and make sure all taxes have been correctly paid.
Step 3: Wait for the Certificate of Compliance
After sending in the form to request the Certificate of Compliance, you will need to wait for the Canada Revenue Agency to review and verify your calculations. Usually this takes anywhere from 10 to 16 weeks. You may be asked for more information if the original application was not complete. Once the CRA is satisfied, they will send you the Certificate in the mail.
Step 4: File a Tax Return
In most cases, the 25% tax payment you sent to the Canada Revenue Agency is more than your actual final tax obligation. You should consider filing a Canadian tax return to recover a portion of this tax. A very general rule of thumb is you will get back approximately 1/2 of the tax you sent in.
On your tax return you will be able to claim the selling costs (real estate commissions, legal fees, accounting costs, etc) to reduce your taxable gain.
This return is due to be filed by April 30th of the year following the sale. After the return is filed you should receive your refund within approximately 10 to 16 weeks.
Does this sound a bit overwhelming? We’re ready to help