Certificate of Compliance in Canada: Non-Resident Seller’s Checklist
As with all types of sales, there are a number of extra tax-related steps to take when selling property in Canada as a non-resident. One of these is a requirement to obtain a compliance certificate from the Canada Revenue Agency (CRA). Non-residents selling Canadian property must obtain a CRA Certificate of Compliance (Form T2062) to avoid major withholding tax delays. This certificate verifies that any taxes due as a result of your property sale have been reported accurately and paid prior to closing on the sale. If you do not have this certificate, your buyer may be required to hold back a significant portion of the proceeds of your sale until the CRA can verify that you are compliant.
It is mutually beneficial for both parties to have an understanding of what a compliance certificate is, when it needs to be obtained and what documentation needs to be submitted in order to prevent any potential delays or added costs to your sale. No matter what your situation is – whether you are a non-resident selling real property, transferring ownership of real property, or realising capital gains from your investment in real property – this blog will explain the entire process (step by step) in order to ensure that your closing goes smoothly when selling real property in Canada.
What is a Certificate of Compliance in Canada?
The CRA issues a document called Certificate of Compliance for Canada to verify that the seller had correctly provided and paid all amounts owed on the taxes of the transaction before completing that transaction. The certificate generally relates to non-residents selling or otherwise disposing of their interest in a Canadian property; however, the certificate also relates to instances where there may be regulatory compliance requirements such as Business and Environmental Compliance. This certificate is required under section 116 of the Income Tax Act and ensures the seller meets CRA non-resident tax obligations.
When Do You Need a CRA Certificate of Compliance?
Any time a non-resident disposes of taxable Canadian property, including rental homes, condos, commercial units, or land.
Non-resident selling Canadian real estate
If you are a certificate of compliance non-resident Canada seller, you must obtain this certificate before or shortly after the sale. It shows that you have declared your gain from selling Canadian real estate and have paid the appropriate tax to the CRA.
Withholding tax requirements
When a non-resident sells a Canadian property, the buyer is required to withhold a certain amount (typically between 25% and 50%) of the purchase price as a deposit for the CRA (Canadian Revenue Agency) on behalf of the seller. After the CRA issues the Certificate, which indicates the actual tax owed, the CRA will refund any amounts withheld in error.
Certificate of Compliance for Non-Residents in Canada
To obtain a certificate of compliance, a series of steps must be taken by the seller in a timely fashion. Following the proper steps will prevent a delay in processing the Certificate.
Step 1 – Notify the CRA about the sale
The seller must notify the CRA of any proposed sale or disposition of Canadian Property within ten (10) days of the finalization of the transaction.
Step 2 – File the Application for Certificate of Compliance (Form T2062)
The seller must submit the CRA with an application for a certificate of compliance using CRA Form T2062 (or T2062A for Depreciable Property). The application provides essential information such as: sale price, amount realized, and related ownership costs.
Step 3 – Pay any applicable withholding tax
Before the CRA issues your Certificate Of Compliance, you must first have paid or withheld any associated withholding taxes. By paying/withholding these amounts, you are satisfying the correct amount of taxes owed to Canada when a non-resident seller sells a property.
Step 4 – Receive the Certificate of Compliance
Once the CRA has reviewed your application and had a chance to review all tax obligations were satisfied, the CRA will issue the Certificate Of Compliance. Once you have received this Certificate, you may release the funds previously withheld on behalf of the non-resident seller back to him/her.
Documents Required for Certificate of Compliance
| Document | Purpose / Description |
| Sale Agreement or Purchase Contract | Proves the details of the sale, including the agreed selling price and the closing date. |
| Proof of Ownership and Identity | Provides government-issued identification and confirms legal ownership of the property being sold. |
| CRA Form T2062 or T2062A | The complete financial details of the sale must be recorded accurately; These full financial details are necessary for the CRA to review. |
| Payment of Tax on the Capital Gain | The CRA Certificate of Compliance is proof that the relevant tax or withholding has been submitted and remitted to the correct authority before the CRA will accept the Certificate. |
Conclusion: Smooth Closings with a CRA Certificate of Compliance
When you get your CRA Certificate of Compliance early, it makes the difference between a smooth property sale and a nightmarish property sale. For non-residents of Canada, it is important to prepare well in advance, collect all required documents, and communicate closely with accountants, in order to avoid incurring any penalties or delays, as they pertain to property sales. At Orbit Accountants, we offer a full suite of real estate taxation services, and assist in completing and filing non-resident taxation returns, which enables our clients to be compliant while preserving more of their hard earned money.
Frequently Asked Questions
What is a CRA Certificate of Compliance?
It’s a document confirming that a non-resident has paid the right tax on their Canadian property sale.
Do all non-residents need a certificate when selling property?
In most cases, non-residents selling taxable Canadian properties are required to obtain a Certificate of Compliance.
How do I apply for a Certificate of Compliance with CRA?
To obtain a Certificate of Compliance, you need to fill out the form T2062 or T2062A and provide proof of withholding tax payment to the CRA.
How long does it take to get a CRA Certificate of Compliance?
Certificates of Compliance are typically processed between 4–8 weeks, depending on the timing of your application.
What happens if I don’t apply for a certificate before closing?
In many cases, a substantial portion of the purchase price must be withheld by the purchaser to hold until the seller receives the Compliance Certificate from CRA.
Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or accounting advice. CRA processes, withholding requirements, and filing obligations may vary based on individual circumstances. For personalized guidance, consult a qualified tax professional.
