Amazingly, during the last couple of years, non-residents have sold more properties than residents/citizens of Canada. As a non-resident selling property in Canada, you need to know the exact process and how much the withholding tax is.
A Guide for Property Selling Process as a Non-Resident of Canada
Here, I have included everything one needs to be aware of while selling property in Canada. Keep in mind the details you will find here don’t apply to all types of property.
10 Properties That are Suitable for the Information Here
Before learning what to do to sell a property, check to see if it’s on the list. But don’t worry. If you don’t find the property here, check the government website. Let’s check the list out:
- Real and immovable property located in Canada
- Properties used for business purposes
- Insurance properties that belong to insurers
- Shares of companies that are enlisted in a stock exchange
- Shares of companies that are NOT enlisted in a stock exchange
- Interests in partnerships
- Interest in trusts
- Resource property located in Canada
- Timber resource property situated in Canada
Things a Non-resident Selling Property in Canada Should Know
Found your property on the list? Go over the next section.
Notify CRA and Taxation Number: For Individuals
As a non-resident, you are obliged to let the Canada Revenue Agency (CRA) know that you are selling a taxable property. To notify, it’s required that you have a taxation number. In addition, you could be a former resident. In that case, your Social Security Number (SIN) would act as a tax number. However, you might forget the SIN. As a solution to that, you will have to provide your official date of birth, name, and address of the place you lived during your stay. Some non-residents might not have a SIN. But, they have submitted the income tax return file. If you are one of them, you must have a Temporary Tax Number (TTN). And, if you don’t have a TTN, you might have an Individual Tax Number (ITN). Furthermore, you might not have – SIN, TTM, or TIN. If so, you need to apply for an ITN.
You can apply both online and offline mail. If you prefer to apply online, visit the official website of the Canadian government (canada.ca). Once you are on the website, go to the CRA page. Then check Forms and Publications. Finally, select forms listed by number – CRA. There, you will find options for applying for an ITM to CRA as a non-resident. Remember, you must get the number to sell the property. So, send it to CRA as soon as possible. You can do it by mail as well. If it’s urgent, don’t waste time. Just do it online. Regardless, you do it the way it’s convenient.
Learn: How Long Does An Executor Have To Settle An Estate In Canada?
Notify CRA and Taxation Number: For Corporations
If you are running a business in Canada, you will have a business number. Don’t have a Business Number (BN) yet? You can apply for a BN online. First, go to the Canadian government site. Next, check the page for taxes. There, you get a form for Business Registration Online. Also, there will be options and essential instructions to apply for a BN.
Want to do it via email? Here is what you need to do- talk to the assigned tax services office. They will assist you in collecting the form. Also, they will make you aware of everything you should know about doing business in Canada.
You can have further information online. On the page of Publications listed by number in the Canadian government, you will find information on non-residents doing business in Canada. For more information, under the Taxes page of the government website, there is an article describing everything about registering for a BN.
Notify CRA and Taxation Number: For Trusts
All trusts will get an account number once they file income tax returns. Suppose you don’t have one while notifying CRA about selling property. In that case, you will be provided with a distinct account number for the trust.
And you must use that number while making payments. Otherwise, authority won’t be able to identify you, and that will result in a whole lot of hassles.
When Should You Notify CRA?
You should let CRA know within 10 days if you have already sold a property. If you haven’t sold the property yet, find a separate application to get a Certificate of compliance for different properties.
All forms will be found on the Form and Publications page of the government website. Let’s say – you have timber properties. So, you need to apply for a Certificate of Compliance for the timber resources you know. You might have to fill up more than one form. Also, you have an insurance company; you need to submit both a compliance certificate and a remittance notice.
When You DON’T Have to Notify CRA
Some properties might not have a value connected to any real/immovable property located in Canada. You don’t have to let the CRA know that you are selling those properties in that circumstance.
The rules changed for non-taxable properties acquired after March 2, 2010. Do check that from the government website. It will be found on the Income-tax page. There is one more time when you are not required to notify CRA. If the Canadian government has a treaty with your home country, it might not be needed to contact CRA for selling property.
Things You Need to Send to CRA
Before anything, you should send a suitable application for the property within the allocated time. Also, you must send all the required documents. On the website, you will get a list of the required documents. If you miss the deadline, it will delay the process of receiving the Certificate of Compliance. If you have sold the property, you are supposed to send the tax payment immediately with all the documents. If not the direct tax payment, there is an alternative option. CRA will ask for adequate security money.
If you are just notifying CRA beforehand of selling the property, you can send the payable tax. Or, as an alternative, you provide security money. The amount you got after selling the property might not be the same as you reported to CRA. As a result, the payable tax differs too. For that, you must apply to the CRA again to let them know the changes.
See Also, Can a Non-resident Buy Property in Canada?
When Do You File the Canadian Income Tax?
You should be aware by now that when you sell a taxable property, you need to show the income tax returns. And it will vary depending on who is selling the property. It could belong to an individual, to a corporation, or maybe to a trust.
Check the International and non-resident taxes page from the website to know more.
On a Final Note
Once again, this information might be mainly for taxable properties. If you have any confusion, you should visit canada.ca. Also, you might need more details. Whatever it is, check the government website. The Taxes page has all the details for non-residents selling properties.
FAQs
There are a few more things you might like to know. Go through the questions below.
Can non-residents own property in Canada?
Yes. Generally, there are no restrictions for non-residents to buy properties. Yet, rules will vary depending on where you buy it in Canada. For example, some provinces have imposed restrictions on foreigners for buying agricultural and recreational properties.
Also, you might find out some rules on paying extra fees as a non-resident buyer. If you are planning to buy some property, check the rules and regular of the province you are interested in.
Do foreigners pay capital gains tax in Canada?
Yes, you have to pay a levy on the capital gains obtained from an investment. But the investment needs to be sold before you pay to Canada Revenue Agency (CRA). If you fail to pay, CRA will levy penalties.
Do non-residents pay taxes in Canada?
Yes, you need to pay taxes on your earnings in Canada as a non-resident. The tax implication and requirements for submitting an income tax return will be calculated depending on your earnings.
Usually, the amount of tax a non-resident pays is based upon Part XIII tax or Part I tax obligations.
What is the non-resident withholding tax in Canada?
Part XII under tax regulations includes that the withholding tax in Canada for non-residents is flat at 25%. And, it will be applied to employment incomes, Canadian properties, and incomes from businesses based in Canada.
The common payments where taxes will be withheld are- rent, interest payments, pension benefits, dividends, and royalties. And, you won’t have to file a tax return if your incomes from all Canadian sources withhold taxes. Contact a taxation lawyer to know if you are liable for tax obligations.
Can I buy a house if I am not a permanent resident?
Yes, you can buy property as a temporary resident. For temporary stays, you won’t have to meet the immigrant eligibility.
If you need to extend your stay or become a permanent resident, you must meet the requirement as an immigrant. You can rent too. But that will require you to submit an annual tax report to the Canada Revenue Agency (CRA).
