Selling Canadian Property as a Non-Resident? Get the T2062 From Canada Right
A non-resident property sale can trigger Section 116 requirements, purchaser withholding and CRA reporting obligations. The right preparation can make the process easier to manage. WYCPA assists non-resident property owners with the T2062 form Canada process, from reviewing the transaction, calculating the applicable tax position and preparing the supporting documentation, to working through the Certificate of Compliance process with the CRA.
T2062 Form and Certificate of Compliance Services
Form T2062 is used by a non-resident to notify the CRA of a proposed or actual disposition of certain taxable Canadian property and request a Certificate of Compliance under Section 116 of the Income Tax Act.
The form is only one part of the process. For an actual disposition, the CRA issues Form T2068, the Certificate of Compliance, once the required information, documentation and payment or acceptable security have been provided. A proposed disposition may result in Form T2064.
We help you manage the process as a complete transaction rather than treating T2062 as a standalone form.
Our T2062 accountant services can include:
- Reviewing the property, ownership and sale details
- Determining the applicable Section 116 filing requirements
- Calculating the proceeds of disposition and adjusted cost base
- Preparing T2062 and other applicable forms
- Compiling supporting documentation
- Managing CRA correspondence and follow-up
- Addressing payment or security requirements
- Coordinating with your lawyer or closing professional
- Assisting with the subsequent Canadian tax return
Why the T2062 Process Matters
Section 116 can have a direct effect on the money available from a non-resident property sale.
If the Certificate of Compliance required is not issued, the purchaser may be required to pay tax to the CRA and may deduct the applicable amount from the purchase price. The purchaser’s potential withholding is generally 25% of the proceeds, with 50% applying to certain types of property, subject to the applicable certificate limit and Section 116 rules.
That makes timing important.
For an actual disposition subject to the notification requirement, a non-resident vendor generally has 10 days after the disposition to notify the CRA. Late notification can result in a penalty of $25 per day, subject to a $100 minimum and $2,500 maximum. A proposed disposition may also be addressed prior to closing, which provides additional time to prepare the application.
We suggest that you start early, and not wait for the closing date.
We suggest that you start early, and not wait for the closing date.
The Right Filing Depends on the Property
Not every transaction follows the same T2062 process.
|
Form |
Generally applies to |
|
T2062 |
Certain dispositions of taxable Canadian property |
|
T2062A |
Canadian resource or timber resource property, Canadian real property other than capital property, and depreciable taxable Canadian property |
|
T2062B |
Certain dispositions of Canadian life insurance policies |
In some circumstances, more than one form may be required. The correct filing depends on the property and transaction, not simply the fact that the seller is a non-resident.
We review those details before preparing the submission.
What We Handle for Your T2062 Application
A successful application depends on more than completing the CRA form. The supporting tax calculation needs to be consistent with the transaction and the records available.
We may look at:
Purchase and sale records
Agreements, statements of adjustment and acquisition details establish the transaction history.
Adjusted cost base
Original purchase costs and eligible capital improvements can affect the calculation.
Selling costs
Some expenses are not taken into account in the calculation of the Section 116 payment itself, but the relevant transaction expenses must be considered when determining the final tax position.
Ownership and tax information
We review the ownership, identification and relevant Canadian tax history to make sure the application is prepared with all the necessary information. CRA specifically notes that missing supporting documentation can delay the issuance of a Certificate of Compliance.
Managing CRA Holdbacks
A Certificate of Compliance may not be available when the purchaser's remittance obligation arises. In appropriate circumstances, a CRA comfort letter can help manage this period.
A comfort letter may allow the purchaser or its representative to hold back funds pending the CRA’s review, rather than requiring immediate remittance. It does not replace the Section 116 filing or guarantee a particular outcome.
We review the suitability of this approach for the transaction and assist you with the CRA obligations around the same.
We review the suitability of this approach for the transaction and assist you with the CRA obligations around the same.
From T2062 Form to Final Tax Reporting
The Section 116 payment or security is applied to the vendor’s tax account. Where a Canadian income tax return is required, the final tax liability is determined when that return is assessed. Any excess payment may then be refunded, subject to the applicable rules.
This is why we look beyond the initial form.
Our Approach
1
Review
We assess the property, ownership and proposed transaction.
2
Calculate
We establish the relevant proceeds, adjusted cost base and Section 116 amount.
3
Prepare
We complete the applicable forms and supporting documentation.
4
Submit and respond
We manage the CRA submission and address follow-up requirements.
5
Coordinate
Where appropriate, we work with your lawyer or closing professional.
6
Complete
We assist with the subsequent Canadian tax reporting and reconciliation.
Why Choose WYCPA?
Non-resident property transactions often sit at the intersection of tax, timing and the legal closing process. Our role is to bring those tax requirements together.
With more than 35 years of accounting experience, we provide CPA-led support for non-resident tax matters and CRA requirements. We focus on the details that affect the transaction while keeping the process practical for the property owner and their professional advisers.
Whether you are preparing for a sale or have already completed one, we can help you determine the next step.
Do not leave your Certificate of Compliance application until the last minute.
FAQs
Form T2062 is used by a non-resident to notify the CRA of a proposed or actual disposition of certain taxable Canadian property and request the applicable Certificate of Compliance under Section 116. The appropriate filing depends on the property and transaction.
The Section 116 notification can be made for a proposed disposition before the sale or, where applicable, within 10 days after an actual disposition. Starting before closing gives more time to prepare the calculation, documentation and payment or security requirements.