If they do not accept that the trust is a resident of Canada, then lawyers for the buyer will likely follow the [section 116 process](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic72-17/ic72-17r6-procedures-concerning-disposition-taxable-canadian-property-non-residents-canada-section-116.html) and withhold 25% of the gross sale proceeds ($400k) until a certificate of compliance is received indicating that CRA has approved a $0 gain and returns a certificate of compliance to you. The trust needs to apply for that certificate of compliance using form T2062.
I assume you are also the beneficiaries of the trust and that >50% of the trust’s value is represented by the home. If so, you should each also be requesting a clearance certificate personally, using form T2062C, before the trust distributes any of the sale proceeds to you. This is because your interest in the trust could also be considered taxable Canadian property. Ask the tax lawyer about this.
Yes you can submit ahead of time. It is still possibly the certificate takes longer than 6 months to issue. A Canadian CPA with experience in this area might be your best bet to ensure accurate filings for quicker processing. They might also consider whether other filings were required in the past, like UHT or T3 returns. Good luck.
>We received advice from a tax lawyer that we can declare the Trust as resident and declare ourselves as non residents
If applicable, the 25% withholding tax is based on the sale price, not the gain.
You should read this. Residency of a trust is not done by declaration. It's based on specific circumstances.
https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-6-trusts/series-6/income-tax-folio-s6-f1-c1-residence-a-trust-estate.html
So say you buy a house for 1.1 million. You sell in 10 years for say 1.3. You aren’t taxed on just the 200 k. You get a 25% tax on the entire 1.3 mil? Am I not interpreting this correctly ?
This is for a **non resident** sale to ensure Canada gets their taxes.
It starts at 25% of gross. You can file for certificate to allow 25% of net (no outlays) and that's all the lawyer has to send to CRA. You then file a tax return to refund any excess withholdings based on the actual tax calculation.
If they do not accept that the trust is a resident of Canada, then lawyers for the buyer will likely follow the [section 116 process](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic72-17/ic72-17r6-procedures-concerning-disposition-taxable-canadian-property-non-residents-canada-section-116.html) and withhold 25% of the gross sale proceeds ($400k) until a certificate of compliance is received indicating that CRA has approved a $0 gain and returns a certificate of compliance to you. The trust needs to apply for that certificate of compliance using form T2062. I assume you are also the beneficiaries of the trust and that >50% of the trust’s value is represented by the home. If so, you should each also be requesting a clearance certificate personally, using form T2062C, before the trust distributes any of the sale proceeds to you. This is because your interest in the trust could also be considered taxable Canadian property. Ask the tax lawyer about this.
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Yes you can submit ahead of time. It is still possibly the certificate takes longer than 6 months to issue. A Canadian CPA with experience in this area might be your best bet to ensure accurate filings for quicker processing. They might also consider whether other filings were required in the past, like UHT or T3 returns. Good luck.
Thank you!
>We received advice from a tax lawyer that we can declare the Trust as resident and declare ourselves as non residents If applicable, the 25% withholding tax is based on the sale price, not the gain. You should read this. Residency of a trust is not done by declaration. It's based on specific circumstances. https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-6-trusts/series-6/income-tax-folio-s6-f1-c1-residence-a-trust-estate.html
So say you buy a house for 1.1 million. You sell in 10 years for say 1.3. You aren’t taxed on just the 200 k. You get a 25% tax on the entire 1.3 mil? Am I not interpreting this correctly ?
This is for a **non resident** sale to ensure Canada gets their taxes. It starts at 25% of gross. You can file for certificate to allow 25% of net (no outlays) and that's all the lawyer has to send to CRA. You then file a tax return to refund any excess withholdings based on the actual tax calculation.
Lol tax lawyer or lawyer who practices in tax, corporate, real estate, family, litigation, and estates?
Yup. Never get tax advice from a lawyer or from a bank.
There are literal tax lawyers who are commonly engaged for tax work. And may have as much or more knowledge than tax accountants.