My sale closed and nobody told the CRA — what do I do first?
Start with the closing date and work outward from it, because the clock for notifying the CRA runs from that date and everything else in the file is arranged around it. Get the notification prepared and in, even while the supporting documents are still being gathered. In parallel, confirm with the lawyer holding the holdback that the money is staying put, which it should, because the buyer carries personal liability if it is released without a certificate. Then assemble the cost-base evidence, because the certificate is computed on the gain and the gain cannot be proved without it. Late is retrievable. Unfiled and unexplained is what turns into correspondence.
How long after closing do I have to get this moving?
The window is short and it runs from closing, not from when the money reaches you or when your lawyer gets round to the file. Treat completion as the trigger and the notification as the first thing that happens afterwards. What makes this awkward in practice is that the application wants cost-base evidence, and purchase documents, improvement receipts and selling costs take longer to collect than the clock allows if you begin on the day of completion. That is why, where there is any warning at all, the documents are assembled before the sale closes. If the date has already passed, the position is retrievable, but it is retrieved by filing rather than by waiting.
The buyer’s lawyer is holding part of my money — how do I get it released?
Only the certificate releases it, and that is deliberate. The lawyer is holding the money because the buyer is personally liable if it goes out without one, so no amount of reassurance from you will move it, nor should it. The route is the application: notify the CRA of the disposition, compute the gain against your cost base and your selling costs, and support the figures with documents. The certificate issued on that basis is what the lawyer needs in order to pay out. Since the holdback is measured against the proceeds and the certificate against the gain, the sum released is usually a good deal more than people expect when they first see the trust ledger.
I am selling next month — what should I do before closing?
Three things, all before completion. Get the cost-base file together: the documents from when you bought, the closing statement, and receipts for capital improvements kept apart from ordinary repairs. Settle in writing with both lawyers how the holdback will be held and what will release it, so that nobody is improvising afterwards. And have the notification drafted, so that it goes in on the clock rather than after it. Done in that order, the application becomes an administrative step. Done after closing, the same work has to be squeezed into a short window while the buyer’s lawyer sits on part of your proceeds.
Can I just sort all of this out on my tax return instead?
The return does not do this job. It reports the disposition and computes the tax on the gain, but it comes much later and it has no effect on the holdback, which sits in a trust account until a certificate says otherwise. Waiting for the return means leaving your own proceeds with someone else for the better part of a year, and it leaves the notification obligation unmet in the meantime. The right sequence is both filings: the application first, on the clock that starts at closing, and then the return for the year of the sale, which reports the gain and credits whatever was remitted.
What if the buyer released the holdback to me anyway?
It does not help you and it exposes them. The buyer is personally liable for the amount that should have been held, so a release without a certificate creates a problem on their side of the transaction, and it tends to come back to the seller through the lawyers. Your own obligations are unchanged: the disposition still has to be notified on its clock, and the gain still has to be computed and reported. If it has already happened, work through it in the order the rules assume, which is to notify, then apply with the cost-base evidence, then file the return for the year, rather than treating an early release as the file being closed.
Is an inheritance from overseas taxable in Canada?
Canada has no inheritance or estate tax, so receiving a bequest is not income to you. Tax happens on the other side of the transaction — the deceased's final return, where a deemed disposition of their property can arise, and any tax the foreign country levies on the estate. What changes for you is what comes next: the asset you now hold may be reportable foreign property, and its value at the date of death becomes your cost base for future gains. See a foreign inheritance.
What does "received a distribution from a foreign trust" mean on my return?
It is asking whether the trust conferred anything on you during the year — cash, property, or the use of trust property, including rent-free occupation of a house and, in some circumstances, a loan. Answering yes brings an information return, and where the distribution includes income accumulated in earlier years the tax computation can carry an interest charge for the delay. Trust accounts showing the composition of the distribution are what keep that computation from defaulting against you. See Form 3520.
