Non-Resident Status Carries Significant Tax Consequences
In Canada, when a seller is considered a non-resident for tax purposes, the buyer may have a legal obligation to withhold a portion of the sale price — unless certain steps have been completed in advance.
Being a Canadian citizen is not sufficient: tax status depends on your residency situation for income tax purposes.
A Tax Compliance Certificate May Be Required
In many cases, the non-resident seller must initiate proceedings with tax authorities to obtain the required authorizations or certificates in connection with the sale.
Without this planning, significant withholdings may be applied to the sale proceeds.
Administrative Timelines Must Be Anticipated
Tax matters related to a non-resident sale are not always resolved quickly. Waiting until the last minute can delay the transaction or complicate the release of funds.
Documentation Must Be Complete
Depending on the situation, declarations, tax forms, or supporting documents may be required. Preparing these in advance greatly facilitates the process.
Coordination Among Professionals Is Essential
A transaction involving a non-resident often requires close coordination between the notary, the accountant or tax specialist, and other parties to the file in order to ensure an efficient closing.
Good planning prevents unpleasant surprises. A real estate transaction involving a non-resident requires special attention. Early consultation often avoids delays, unnecessary withholdings, and administrative complications.