Many non-Canadian residents own various types of property in Canada and need to understand what their tax reporting requirements and deadlines are to the Canada Revenue Agency when they sell the property.
What Types of Property Do I Need to Report?
The first step is to know if the property you sold needs to be reported to the CRA. Examples that require reporting include:
- real property situated in Canada
- life insurance policies
- various resource-based and depreciable property
Some shares of corporations and mutual funds may also require reporting if 25% or more of the outstanding shares were sold.
There are a few excluded properties that you do not need to report, including bonds, shares and mutual funds that were listed on a stock exchange.
How Do I Report Disposition?
Any non-resident seller of property in Canada must notify the CRA about the sale within 10 days of the transaction by completing one of the following forms applicable to the type of property:
- Form T2062, Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property
- Form T2062A, Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Canadian Resource and Timber Resource Property, Canadian Real Property (other than Capital Property) or Depreciable Taxable Canadian Property
- Form T2062B, Notice of Disposition of a Life Insurance Policy in Canada by a Non-Resident of Canada.
To report the disposition, non-residents should have a Canadian tax number.
- If you were a past resident this tax number is your Social Insurance Number.
- Individuals who do not have a SIN, but have filed a Canadian tax return in the past may use a temporary tax number or an individual tax number that they were assigned.
- If you do not have any of these three numbers, complete form T1261, Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents.
If the form T1261 is required, you should complete and send to the CRA in advance of the sale if possible. If the disposition is being completed by a corporation instead of an individual, a business number will be used as the tax number. If the corporation does not have a business number, it can obtain one online using the Business Registration Online service.
What Do You Need to Send to the CRA?
In addition to filing the correct disposition form, non-resident sellers must also provide any supporting documentation as outlined on the completed form. For example, if there is a payment of taxes required, then the payment should be sent in. As an alternative to payment, however, the CRA may accept some forms of security to cover the tax obligation.
All required documentation must be sent to the Tax Services Office nearest to where the property is located. Once the CRA is satisfied with the reporting, documentation and payment, it will issue a Form T2068, Certificate – The Disposition of Property by a Non-Resident of Canada.