Non-resident Certificate of Compliance
Are you considered a non-resident and own taxable property in Quebec? You are required to notify the revenue agencies and apply for a non-resident certificate of compliance using specific forms.
Once you have submitted these forms, you will obtain your certificate of compliance. This certificate allows the Canadian government to prevent a possible non-payment of taxes on your property.
You will generally have to pay a tax advance of 38,75% of the capital gain (the increase in value between the sale price and the purchase price), which can represent a substantial amount. However, by making the right moves, it is possible to reduce this tax.
EB Conseil Fiscal Inc. is a Montreal-based tax firm that can help you with all the steps related to your non-resident certificate of compliance. We can help you apply for and obtain a reduction in withholding tax on the sale of a property.
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Non-resident Certificate
An Essential Step for Non-Residents
When you sell a property in Canada that is taxable as a non-resident, your certificate of compliance ensures that you pay tax on the sale. If this document is not provided, you will be subject to heavy penalties.
In order to avoid any delicate situation involving your buyer and the tax authorities, you must apply for the certificate. At the time of the transaction, you will have to submit several forms, as well as the amount of tax due, if necessary.
The two forms to complete are:
- For the federal government: the T2062 for the CRA
- For the provincial government: Revenu Québec’s Notice of Disposition or Proposed Disposition of Taxable Québec Property
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Non-resident Certificate
When to Apply for a Non-Resident Certificate of Compliance
As with any official document, there are certain deadlines for your non-resident certificate of compliance. You must send your request no later than 10 days after the date of the transaction, which is the date of the signature at the notary’s office. If you do not respect these deadlines, a penalty of $25 per day, form, government, property, and person is applied.
Penalties are to be expected at both federal and provincial levels. Penalties are doubled if you are late: this means there is even more reason to apply for your certificate of compliance on time!
With EB Conseil Fiscal Inc. you can be sure that your application for a non-resident certificate of compliance will be completed and submitted on time. We generally recommend applying just before the transaction, to avoid any concerns regarding delays.
Non-resident Certificate
Solutions to Minimize Taxes
38% of the capital gain between the purchase price and the sale price can represent a significant sum. However, there are techniques to reduce this tax. If you file your tax return in the year following the transaction, you may be able to reclaim some or all of this amount. When you file your tax return, you can then use one of the following techniques:
- Include in your return the expenses related to the sale, such as broker, accountant, or notary fees
- Calculate a graduated tax rate and then claim the overpayment
- Make certain tax elections related to the principal residence, such as the +1 rule. This rule allows a taxpayer to consider two properties as eligible for the principal residence exemption for a period of one year
At EB Conseil Fiscal Inc. our advisors will guide you toward the best solutions to benefit from a partial or total tax reduction.
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EB Conseil Fiscal Inc. - Your Tax Ally!
EB Conseil Fiscal Inc. is a firm of tax accountants based in Montreal. We put our expertise into action to assist you in all aspects of your taxation. From income tax returns to voluntary disclosure and tax litigation, we are by your side to ensure your tax compliance and help you save taxes.
Call on our experts to complete your non-resident certificate of compliance. We will help you apply for your certificate, and also help you reduce the taxes on the sale of your property.