Disposing of or acquiring certain Canadian property

This information on this page applies to:

To which types of Canadian property does this information apply?

It applies to the disposition and acquisition of the following properties:

  • real property situated in Canada;
  • life insurance policies in Canada;
  • resource property situated in Canada;
  • timber resource property situated in Canada;
  • depreciable property that is taxable Canadian property;
  • eligible capital property that is a taxable Canadian property;
  • any interest in or option in respect of the above (whether or not that property exists); and
  • other taxable Canadian property (as outlined below).

For dispositions after March 4, 2010, the taxable Canadian property (TCP) referred to above generally includes the following:

  • real or immovable property situated in Canada;
  • property used or held in a business carried on in Canada;
  • designated insurance property belonging to an insurer;
  • shares of corporations that are not listed on a designated stock exchange, an interest in a partnership, or an interest in a trust, if at any time in the previous 60-monthperiod, more than 50% of the fair market value of the shares or interest was derived (otherwise than through a corporation, partnership or trust the shares or interests in which were not themselves taxable Canadian property at the particular time) from one or any combination of:
    • real or immovable property situated in Canada;
    • resource property situated in Canada;
    • timber resource property situated in Canada; and
    • options or interests in any of the above.
  • shares of corporations listed on a designated stock exchange, a share of a mutual fund corporation or unit of a mutual fund trust, if at any time in the previous 60-month period:
    1. 25% or more of the issued shares of any class, or 25% or more of the issued units, belonged to either the taxpayer or the taxpayer and persons with whom the taxpayer did not deal with at arm's length; and
    2. more than 50% of the fair market value of the shares or unit was derived from one or any combination of:
      • real or immovable property situated in Canada;
      • resource property situated in Canada;
      • timber resource property situated in Canada; and
      • options or interests in any of the above; or
  • an option or interest in any property listed above.

Excluded properties

Some Canadian properties are excluded from the above requirements and are defined as excluded properties. These properties include the following:

  • a property that is a taxable Canadian property solely because a provision of the Income Tax Act deems it to be a taxable Canadian property;
  • a property that is inventory of a business carried on in Canada (other than real or immovable property situated in Canada, a Canadian resource property or a timber resource property);
  • a security that is
    1. listed on a recognized stock exchange, and
    2. either
      1. the share of the capital stock of a corporation, or
      2. SIFT wind-up entity equity;
  • a unit of a mutual fund trust;
  • a bond, debenture, bill, note, mortgage, hypothecary claim or similar obligation;
  • property of a non-resident insurer that is licensed to carry on an insurance business in Canada and does so;
  • property of an authorized foreign bank that carries on a Canadian banking business;
  • an option in respect of property (whether or not such property is in existence) referred to in any of the items above;
  • an interest, or for civil law a right, in property referred to in any of the items above; and
  • a property that is, at the time of its disposition, a treaty-exempt property of the person (see note below).

Note

A property is considered treaty-exempt property of the vendor if, at the time of the disposition, the property is a treaty-protected property of the vendor and where the purchaser and the vendor are related, the purchaser provides notification to the CRA. For more information, see Canadian and Non-resident purchasers acquiring certain treaty-protected property from Non-residents of Canada.

Non-residents disposing of certain Canadian Properties

Do I need a taxation number?

Individuals

All non-resident individuals who dispose of a property and who are required to notify the Canada Revenue Agency (CRA) of the disposition should have a Canadian taxation number.

If you are a former resident of Canada, this taxation number is your Social Insurance Number (SIN). If you had a SIN but don't remember it, please ensure you state this on the notification form along with your date of birth, your complete legal name, and the address you lived at in Canada prior to emigrating.

If you do not have a SIN but previously filed a Canadian income tax return, you may have been assigned a Temporary Tax Number (TTN) or an Individual Tax Number (ITN).

If you do not have a Canadian SIN, TTN, or ITN you should complete Form T1261, Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents. Send it to the CRA in advance of the disposition if possible. Otherwise, attach it to any of the notification forms mentioned below and submit them together.

Note

Please quote your SIN, TTN, or ITN on all correspondence with us and for any payment you send to us. A misallocated payment may cause a delay in issuing the Certificate of Compliance.

Corporations

A Business Number (BN) is a registration number for businesses. To obtain a BN, see Business Registration Online (BRO) or contact the Business Windows Section at one of our designated tax services offices. A list of these offices is available at Doing Business in Canada - GST/HST Information for Non-Residents.

For more information about obtaining a BN, see Pamphlet RC2, The Business Number and Your Canada Revenue Agency Program Accounts.

Trusts

A Trust account number is a number assigned to a trust that filed a Canadian income tax return in previous years. If you do not have Trust account number at the time you file the notification, a special account number will be allocated in the name of the trust. Please use the Trust or special account number with any payment you submit to ensure it is applied correctly.

When should I notify the CRA of a disposition or proposed disposition of a property?

The Non-resident vendor must notify the CRA about the disposition (notification is required within 10 days of the date the property was disposed of) or proposed disposition by completing the applicable notification forms below and sending them to us along with the payment or acceptable security to cover the resulting tax payable :

You may also need to provide one of the following forms:

Note

If you have disposed of a life insurance policy, Form T2062B and any required payment will be sent to us by the life insurance company.

Are there situations where I am not required to notify CRA of the disposition of a property?

Since March 5, 2010, if you have disposed of certain properties that do not derive their value principally from real or immovable property situated in Canada, you do not have to notify us of the disposition. See Changes to Taxable Canadian Property below.

If you have disposed of a property that is fully treaty-protected under any treaty that Canada has with another country, you may not be required to notify us of the disposition. Please see the section Canadian and Non-resident purchasers acquiring certain Treaty-protected property from Non-residents of Canada.

What should I send the CRA?

Send the form that applies to your situation to CRA within the allowed time. Be sure to provide the necessary supporting documentation as outlined on Form T2062 and Form T2062A. Missing documentation will delay the issuance of your Certificate of Compliance.

If you are letting us know about an actual disposition and you provide the payment to cover the resulting tax payable, or acceptable security, we will issue you a certificate of compliance, Form T2068, Certificate - The Disposition of Property by a Non-Resident of Canada.

If you are letting us know about a proposed disposition and you provide either the payment to cover the resulting tax payable or acceptable security, we will issue you a certificate of compliance, Form T2064, Certificate - Proposed Disposition of Property by a Non-Resident of Canada.

When you actually dispose of the property, if the facts and amounts of the actual disposition differ from those you reported to us for the proposed disposition, you should send us another completed form with the changes and provide us with acceptable security or any additional payment to cover the increase in tax payable. We will then issue you a certificate of compliance, Form T2068.

Where do I send my completed notification form?

You should send the completed notification form to the Centre of Expertise (CoE) for the region in which the property is located.

The location of the property can be determined as follows:

  • for real property, land, buildings, or land and buildings, the CoE is determined based on the property's legal or municipal address;
  • for shares or assets in a business, the CoE is determined based on the head office address of the corporation whose shares or assets are being disposed of. You may have to contact the corporation to obtain the correct address; or
  • for a capital interest in an estate or trust (pursuant to the distribution of capital), the CoE  is determined based on the location of the Trustee.

For property located in the Atlantic provinces, send the completed notification to the Centre of Expertise:

Regular Mail:

Canada Revenue Agency
Section 116 Centre of Expertise
Post Office Box 8500, Station Central
Charlottetown PE C1A 8L3

Certified/Registered Mail:

Canada Revenue Agency
Section 116 Centre of Expertise
1-30 Brackley Point Road
Charlottetown PE  C1A 6X9

For property located in Quebec, send the completed notification to the Centre of Expertise:

Regular/Certified/Registered Mail

Shawinigan-Sud Tax Centre
4695, 12th Avenue
Shawinigan-Sud QC G9P 5H9


For property located in Ontario or Nunavut, send the completed notification to the Centre of Expertise:

Regular Mail

Canada Revenue Agency - Section 116
P.O. Box 9807
Ottawa ON  K1G 4A5

Certified/Registered Mail

Ontario S116 Centre of Expertise - IOTSO
C/O Disposition Program – 2nd Floor
2204 Walkley Road
Ottawa ON  K1A 1A8


For property located in the Prairie provinces or the Northwest Territories, send the completed notification to the Centre of Expertise:

Regular Mail

Canada Revenue Agency - Section 116
PO Box 14003
Winnipeg MB  R3C 0N8

Certified/Registered Mail

Canada Revenue Agency - Section 116
Prairie S116 Centre of Expertise – ETSO
66, Stapon Road
Winnipeg MB  R3C 3M2


For property located in British Columbia or Yukon, send the completed notification to the Centre of Expertise:

Regular Mail

Canada Revenue Agency - Section 116
PO Box 470 STN MAIN
Surrey BC  V3T 5B7

Certified/Registered Mail

Pacific S116 Centre of Expertise - VTSO
C/O Disposition Program – Sec 445-16
9755 King George Boulevard.
Surrey BC  V3T 5E1


Penalties

Non-resident vendors who fail to notify CRA of the disposition within the 10 day period will be liable to a penalty under subsection 162(7) of the Act. This penalty is $25 a day for each day the notification is late, with a minimum of $100 and a maximum of $2,500.

For more information, go to Failure to comply penalty - Non-resident vendor notification on the disposition of taxable Canadian property.

If you do not let us know about your disposition, and a Certificate of Compliance (Form T2064 or Form T2068) is not issued, the purchaser may become liable to pay a specified amount of tax that arises from the disposition on behalf of the vendor. In this case, the purchaser is entitled to withhold 25% (50% on certain types of property) of the proceeds minus the amount of the certificate limit, if any, from the proceeds.

When do I have to file my Canadian Income tax return?

Generally, if you have disposed of a taxable Canadian property (TCP), you are required to file a tax return.

  • Non-resident individuals must file their Canadian income tax return by April 30 of the year following the year in which the disposition took place. Copy 2 of the Certificate of Compliance must be attached to the return.
  • Non-resident corporations must file their Canadian income tax return within six months after the end of the taxation year in which the disposition took place. The taxation year of a corporation is its fiscal period.
  • Non-resident trusts must file their Canadian income tax return within 90 days after the end of the trust's taxation year in which the disposition took place.

However, you are not required to file a tax return for the year if all of the following apply:

  • you are a non-resident of Canada;
  • no tax is payable for the tax year in which you have disposed of the property;
  • you are not liable to pay any amount to us for any previous tax year; and
  • each Canadian property you have disposed of in the tax year is:
    • excluded property; or
    • a property for which you were not required to remit an amount or provide acceptable security for us to issue a Form T2064 or Form T2068 (Certificate of Compliance).

What is acceptable security?

As an alternative to the immediate payment of tax, we may accept adequate security for the tax as an interim arrangement.

If you need more information about acceptable security, you or your representative should contact the Revenue Collections Division of the applicable Tax Services Office.

Changes to Taxable Canadian Property

What has changed with respect to taxable Canadian property?

The definition of taxable Canadian property was amended for dispositions after March 4, 2010, to exclude certain properties that would normally be eligible for an exemption under one of Canada's existing tax treaties. This change applies to certain properties that do not derive their value, currently or within the previous 60 months, principally from real or immovable property (including Canadian resource property and timber resource property) situated in Canada. These properties include certain:

  • shares of corporations;
  • interests in a trust; and
  • units of a unit trust.

Does this change apply if the non-resident who owns the property is a resident of a country with which Canada does not have a tax treaty?

Yes, these changes apply to all taxpayers.

Do I have to notify CRA if I disposed of my shares of a corporation?

If the shares do not derive their value, currently or within the previous 60 months, principally from real or immovable property (including Canadian resource property and timber resource property) situated in Canada, you will not be required to notify the CRA of the disposition.

I purchased shares of a corporation from a non-resident who did not obtain a Certificate of Compliance; will I be required to withhold a portion of the purchase price?

If the shares do not derive their value, currently or within the previous 60 months, principally from real or immovable property (including Canadian resource property and timber resource property) situated in Canada, you will not be required to withhold a portion of the purchase price.

How will I determine if the property that I own derives its value, currently or within the previous 60 months, principally from real or immovable property (including Canadian resource property and timber resource property) situated in Canada?

For shares of a corporation, obtain a declaration from the corporation certifying that the value of the shares is not principally derived, and has not been for the previous 60 months, from real or immovable property (including Canadian resource property and timber resource property) situated in Canada.

For a capital interest in a trust or a unit of a unit trust, obtain a declaration from the trust that the value of the trust is not principally derived, and has not been for the previous 60 months, from real or immovable property (including Canadian resource property and timber resource property) situated in Canada.

Canadian and Non-resident purchasers acquiring certain Treaty-protected property from Non-residents of Canada

These procedures apply to the acquisition of treaty-protected property after December 31, 2008.

What is treaty-protected property?

Most tax treaties allow Canada to tax the income or gains only on Canadian real and resources properties and on shares of companies that derive most of their value from such properties. As a result, Canada is prevented from taxing other types of property that would normally be taxable under the Income Tax Act (the Act). As of January 1, 2009, if the income or gain from the disposition of the property is fully exempt under Part I of the Act because of a tax treaty that Canada has with the country of residence of the vendor, the property is treaty-protected.

Do I need a taxation number?

You are not required to have a taxation number to notify CRA of the acquisition of a treaty-protected property from a Non-resident of Canada. However, if you have previously been issued a SIN, TTN, ITN, BN, or Trust number, please indicate it on the submitted Form T2062C, Notification of an Acquisition from a Non-Resident Vendor of Treaty-Protected Property.

When should I notify the CRA of the acquisition of treaty-protected property from a Non-resident of Canada?

If you and the vendor are related (see note below), you are required to send Form T2062C within 30 days of the date of purchase of the property. If you do not send the form within 30 days, the notification will be invalid and the vendor will be required to notify us of the disposition.

For a transaction between non-related parties, the vendor is not required to advise CRA of the disposition and the purchaser is not required to advise CRA of the acquisition. However, after determining the vendor's country of residence for treaty purposes by reasonable inquiry (see part D of Form T2062C) and establishing that the Canadian property is treaty-protected property, if you want to reduce the potential for the purchaser liability , you may notify us with Form T2062C within 30 days from the date of acquisition. If you do not send the form within 30 days, the notification will be invalid.

If the property is not, in fact, treaty-protected, the CRA may assess a purchaser liability. However, the CRA will generally not issue such an assessment if the purchaser has filed Form T2062C, is unrelated to the vendor and has made every reasonable effort to determine that the property qualifies as treaty-protected.

Generally, we will not acknowledge that we have received Form T2062C. However, you will be advised if Form T2062C is late-filed as these notifications are invalid.

Note

For information on the term "related persons", read Interpretation Bulletin IT419 Meaning of Arm's Length.

Where do I send my completed notification form?

See “Where do I send my completed notification form?” above.

Purchaser's liability

If a Certificate of Compliance (Form T2064 or Form T2068) is not issued and the property is not excluded property, the purchaser may become liable to pay a specified amount of tax that arises from the disposition on behalf of the vendor. In this case, the purchaser is entitled to withhold 25% (50% on certain types of property) of the proceeds minus the amount of the certificate limit, if any, from the proceeds.

For more information on purchaser's liability, see Information Circular IC72-17, Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada - Section 116.

Forms and publications

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