In order to ensure fairness and prevent non-tax residents from evading taxes and being unable to trace them, the tax law stipulates that any non-tax resident who sells a personal investment property in Canada must
The lawyer must first withhold 25% of the property sales price and apply to the tax bureau through an accountant for a tax clearance certificate within 10 days after the property is handed over. certificate of compliance , which is used to review the net proceeds from the sale of the property. Once approved, the attorney will refund the remainder of the amount previously withheld. If you have more than one property to settle, you will need to file separate tax clearance applications.
However, this does not mean that the tax bureau treats non-tax residents as leeks that can be cut at will. Considering that there will be expenses such as lawyer fees after the property is handed over, the seller can report the expenses to the tax bureau again before April 30 of the second year after the property is handed over and sold, further reducing the net income and obtaining a tax refund. However, the application takes time, and the tax clearance certificate will take at least three months at the earliest. In addition to various audits and calculations, the entire process from selling the house to finally obtaining a tax refund is conservatively estimated to take at least one and a half years.
If you do not submit the application according to the rules for the sake of saving trouble, you will be fined $25 per day, starting at $100, and up to $2,500 per year. At the same time, according to tax laws, if you buy a house from a non-tax resident without a tax clearance certificate, the buyer will bear all possible taxes. In other words, without a tax clearance certificate, generally no one will dare to take over your house.
Indeed, due to its large size, the system may appear clumsy in operation. But each step has its own meaning, and is to serve more ordinary people more fairly and justly, and is finalized after discussions among all parties. If you jump out of the victim's perspective and change your thinking, it is not difficult to find that following the rules step by step, although it may seem like a detour, is actually the most time-saving, labor-saving and cost-saving way.
