I forgot the change of use election, can I still make it?
Often, yes, but not as of right. A late election is a request rather than a filing. You are asking the CRA to accept something that should have gone in with the return for the year the use changed, and it will look at why it was missed and whether the facts support it. Two things decide how that goes. The first is evidence of what the property was worth on the date of the change, which gets harder to obtain with every year that passes. The second is whether the returns for the intervening years are consistent with the position now being taken. Rental income reported properly year after year helps. A gap in the record does not.
What is the penalty for filing the change of use election late?
The election is a letter filed with a return rather than a return of its own, so the cost is not a separate penalty on a form. It is the reassessment of the year the use changed, and interest on the balance that results. Where the return for that year was also filed late with tax owing, the CRA late-filing penalty applies: for the 2025 tax year, 5 per cent of the balance owing plus 1 per cent of that balance for each full month the return is late, to a maximum of 12 months. For the same tax year it is 10 per cent plus 2 per cent per full month, to a maximum of 20 months, where the CRA had issued a demand to file and had charged a late-filing penalty in any of the three preceding tax years.
Will the CRA charge interest on a gain I never received cash for?
Yes, and this is the part owners find hardest to accept. A deemed disposition produces a liability in a year with no sale and no proceeds, and interest runs on the unpaid balance and compounds daily. Nothing about the absence of a cash event slows it down. It is the reason a missed election is worth dealing with promptly rather than at the eventual sale. The underlying tax may be the same either way, but the carrying cost is not, and it grows quietly in the background for as long as the position is left unresolved.
How do I prove what the property was worth when I moved out?
With evidence created as close to that date as you can get. A retrospective appraisal by a qualified valuer is the usual route, and a good one will say what it relied on: comparable sales around the date, the condition of the property, listings from the period. Keep the supporting material and not merely the conclusion. What does not stand up well is an owner's own estimate, a figure taken from a property website years afterwards, or a number chosen because it produced a convenient result. That value drives the tax in the year of the change and the gain on the eventual sale, so it is worth doing properly once.
I sold the house before realising the election was missing, what now?
The sale does not close the question, it sharpens it. The gain on the sale is computed on a cost position that depends on how the change of use was treated, so the two years have to be dealt with together rather than one at a time. In practice that means establishing the value at the date of the change, deciding whether the late election is still worth requesting on those facts, and making sure the sale year and the change year tell the same story. Filing the sale on one basis while asking for the election on another is what turns a fixable problem into a dispute.
Is it better to come forward or wait for a CRA letter?
Corrections brought forward before the CRA raises the matter are treated differently from those made after a letter has arrived, and the difference is worth having. Beyond that, the practical case for acting first is that you control the sequence. The value evidence is assembled before anything is filed, the intervening years are checked for consistency, and the explanation for the delay is written while the people involved still remember the facts. Waiting reverses all of that. You then answer someone else's timetable with whatever records happen to have survived.
I work remotely from another country for a company back home — who taxes me?
Usually the country you are physically in, because employment income is generally sourced where the work is done, with your residence country taxing it as well if you are resident there and giving credit. Three things follow: your employer may acquire withholding and social security obligations where you sit, a treaty tie-breaker may be needed if both countries call you resident, and a short trip that becomes a long stay can cross a residence threshold nobody was watching. See remote workers and digital nomads.
What is a permanent establishment, and how easily do we create one?
A taxable presence in another country under the treaty — typically a fixed place of business such as an office, branch, factory or workshop, or a dependent agent habitually concluding contracts on your behalf. Some treaties add a services test measured in days. Purely preparatory or auxiliary activity is excluded, but that carve-out is narrower than it sounds: one senior employee working from home in the other country, with authority, has been enough. See business profits and permanent establishment.
