Withholding Taxes - CRA - Persons Living Outside of Canada

If you are selling a property in Canada and you do not live in Canada on the closing date or when the funds are releasable, then you will likely need to obtain a Clearance Certificate from the CRA - Canada Revenue Agency. The lawyer handling your transaction will not be able to release funds unless you first obtain that certificate and give it to your lawyer. If you are planning on selling or have recently sold and are wondering if this applies to you, you should contact the CRA right away. There are penalties and interest that apply to you and also to someone handling the money such as a lawyer if you do not comply so it is far better to enquire early and ensure compliance. A professional tax accountant may also be able to assist. Expect this process to take time so make your enquiries and take action early.

Lawyers are not Able to Judge themselves if you are a Non-Resident

If you live outside of Canada, it is not possible for your Canadian lawyer to know whether the CRA considers you to be a non-resident or not. It depends on information that you need to give the CRA and they will then make that determination. You should not assume that just because you only recently moved or you intend to move back to Canada that it doesn't apply to you. It may very well apply. Therefore you will need to enquire and you may need to provide the certificate. Canadian lawyers are not allowed to transfer funds when the seller lives outside of Canada without complying with holdback provisions. They can be subject to fines or penalties if they ignore the rules.

Applies to Real Estate and Other Properties

This applies to real estate that you own. It can also apply to other property such as the sale of a business, but that is beyond the scope of this article.

Even if the property sold was previously your home, you should be obtaining the clearance certificate. It may be that zero taxes are payable because the sale of your Canadian home is exempt, but you will need to apply for and give your lawyer the certificate anyway.

If you are still living in Canada when your sale closes and you receive your sale proceeds, then if you move to another country later it should not matter, but you should verify this with a tax accountant or the CRA. Remember though that it may take some time after closing before you actually receive the proceeds.

Contact the CRA

Your lawyer is not able to apply for the certificate for you. The best, quickest and least expensive way is for you to apply directly or with the help of a professional tax accountant. Start by contacting the CRA or your accountant. You can visit the CRA's website at http://www.cra.gc.ca. As of May 2012, their phone number contact page is at http://www.cra-arc.gc.ca/cntct/phn-eng.html. Keep in mind that these pages change often so it may not be current.

Notice: The information on this website is general in nature only. It relates to Saskatchewan, Canada and may not be applicable in your jurisdiction. It does not constitute legal advice to you and no solicitor client relationship will be established. You should seek specific legal advice regarding your circumstances from a lawyer entitled to practise law in your jurisdiction.
* Richard Carlson Legal Prof. Corp. & R.T. Carlson Legal Prof. Corp.

www.rickcarlson.com | Mon, 13 Jul 2020 10:02:39 CDT1