What is Non-Resident Canadian Tax Clearance Certificate?
Non-residents are subject to pay withholding tax after selling Canadian properties. Be sure to follow
rules from the Canada Agency (CRA). This means all taxes must submit immediately after the sale of the
property and register for a “Non-Resident Canadian Tax Clearance Certificate”. If seller does not have
the clearance certificate, the purchaser of the property may be forced to withhold some of the sales
amount (up to 50%).
Why do I need a Tax Clearance Certificate?
According to Section 116 of the Canadian Tax Code, non-residents must notify CRA within 10 days of the
sales of the property or within 10 days of the completion of the sales. After receiving the clearance
application by CRA, they will issue a “Certificate: The Disposition of Property by a Non-Resident of
Canada” to the seller. Once the certificate is received, the remaining fund will be returned to the seller.
In order to avoid any chances of refusal to pay the tax payable by the seller, CRA has established a series
of measures. In case of violation, sellers may be fined up to $2500, and a withholding tax of 25% of the
total price of the house by the seller’s lawyer.
What documents do I need to prepare for the Tax Clearance Certificate?
- Apply for ITN (Individual Tax Number for Non-Residents)
- Form T2062
- Property Purchase Contract
- Lawyer documents when buying a house
- Selling Contract
- Deductible expenses related to the sale of the house (lawyer fees, agency fees, accounting fees,
renovation or repair fees, transportation fees, staging costs)
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Tel： (416) 551-5550 or (416) 456-2225
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