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Showing posts from September, 2018

Home Buyers Need To Check Residency Of Home Sellers If They Suspect The Seller Is Not Canadian

When Canadians purchase a home, they are required to withhold part of the purchase price should the seller be a non-resident of Canada. A recent Tax Court of Canada decision (Kau v. the Queen [2018 TCC 156]) should serve as a warning to clients and professionals alike, to watch for any red flags in the purchase process. As a result, the home buyer has to pay 25% of the purchase price to CRA on top of the original purchase price. While hindsight is 20/20, the judge suggests that red flags should have lead to further inquiry by the home buyer as well as the buyer’s lawyer. The following technical overview from of  the court case, outlines that a purchaser and his lawyer failed to adequately ensure the seller of a home was a Canadian resident. “At issue was whether the taxpayer was liable for the withholding tax on the purchase of a condominium as assessed under s. 116(5) of the ITA for the 2011 taxation year, on the basis that he as the purchaser had, after reasonable inquiry…