Non resident tax

Hi. 1 Year a go me and two of my freinds who where non resident of Canada sold a condo in Toronto. How can they pay their tax. They filed the paper for revenue canada more than 6 month ago, but they still didnt get any answer from revenue agency. Do you have any suggestion?


Asked 4 months ago in Toronto, Ontario
Categories: Tax  Real Estate

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Jason Berger

Answer by Jason Berger

Not VerifiedOntario lawyer

Hello,

Did the purchaser withhold any money from the sale proceeds? When someone purchases real estate from a non-resident, the purchaser is required to withhold 25% of the gross purchase price (or 50% in some circumstances). 

In most cases the amount that is withheld exceeds the actual tax liability of the non-resident, since the holdback is based on the gross proceeds, as opposed to the actual capital gain that is taxable to the non-resident. Accordingly, the non-resident should file a tax return in which the actual tax liability can be determined, and the taxpayer can obtain a refund of overpaid tax.

Additionally, if there was rental income earned by the non-resident owners of the property prior to the sale, and the non-resident owners did not file tax returns or pay tax with respect to the rental income (and/or if an agent acting for the non-resident didn't withhold 25% of the gross payments made to the non-resident), there may be tax owing, and there likely would be interest and penalties as well in respect of unremitted withholding tax, and unfiled returns and information returns. 

This is a somewhat complex situation, so you ought to obtain professional tax advice. 

Good luck.

Posted 4 months ago

Please note that this is for informational purposes only and does not constitute legal advice to you. Legal advice pertaining to your particular situation can only be provided by a lawyer who has met with you to obtain all pertinent background information necessary to give you a formal legal opinion. For formal legal advice, hire a lawyer (many give a free first consultation). Contact Jason Berger, or search the Lawyer Directory.

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