What is included in the fee for section 116 clearance certificate?
The clearance application on a disposition of taxable Canadian property, with the cost-base evidence assembled, and the notification filed inside its own clock from closing.
What would make section 116 clearance certificate cost more than the standard tier?
Depreciable property. A rental building brings recapture into the computation and usually a different application route from a plain capital property.
Is the fee really fixed?
Yes, for the scope quoted. If the scope changes — another year appears, an entity turns up, a certificate becomes necessary — we re-quote before doing the work, so there is never an invoice you have not already agreed to.
Why is the buyer holding back part of my sale price?
Because the buyer is personally liable if they release it early. On a disposition of taxable Canadian property by a non-resident, the purchaser is exposed for tax the vendor may owe unless a clearance certificate has been issued, so the money is held until it is. This is not the buyer being difficult, or the solicitor being more cautious than the rules require. The holdback comes out when the certificate is in hand, which is why the application, and the evidence assembled behind it, is the thing that actually releases the funds.
How do I get my section 116 holdback released?
By applying for the clearance certificate and giving the CRA what it needs to compute the tax on the gain. That means evidence of the cost base rather than an assertion of it: the purchase documents, the closing statements from when you bought, and the capital improvements you can support with invoices. The certificate is computed on the gain, not on the sale price, which is why the holdback routinely exceeds the tax that eventually falls due. Once the certificate is issued, the party holding the funds can release the balance and the file can be closed.
What happens if I miss the notification deadline after closing?
The notification runs on its own short clock from the closing date, and it is a separate obligation from your income tax return for the year. Missing it does not make the certificate unobtainable, but it changes the shape of the file: the application is made late, exposure arises for the failure itself, and the money stays where it is for longer. The practical answer is to get the notification in with proper cost-base evidence as soon as the position is known, rather than waiting until the rest of the year's filings are ready.
Do I still file a Canadian return after the certificate is issued?
Usually, yes. The clearance certificate deals with the withholding on the disposition. It is not the final computation of what you owe. The return for the year is where the gain is actually reported, where the full cost base and the selling costs are claimed, and where the amount withheld is brought into account against the tax genuinely due. Treating the certificate as the end of the matter is a common mistake, and it is the step at which money left with the CRA quietly stays there.
Can I apply for the certificate before the sale completes?
An application can be made in advance of closing in the right circumstances, and where the timing allows it that is worth considering, because it can shorten the period your money is held. It is not always the better route. An advance application depends on the terms being settled and on the cost-base evidence already being assembled, and a premature filing that has to be corrected costs more time than it saves. Which route suits your sale is worked out on the first call and priced into the quote before anything is filed.
How much does a section 116 clearance application cost?
It is quoted as a fixed fee in writing before the work starts, and the quote reflects what the file actually needs rather than the value of the property. The standard case is one disposition with complete purchase and improvement records. What moves it is missing cost-base evidence, a property held jointly or through an estate, an additional filing travelling with the application, or a second country wanting the same transaction reported. If the records show the scope is different from what was described, we re-quote and you decide before we carry on.
Do non-residents pay US estate tax?
Yes, on US-situs assets — and with a far smaller exemption than a US citizen or domiciliary receives, which is why exposure can arise at values people assume are safe. US real property, tangible property located there and shares issued by US companies are generally in; foreign-issued securities and certain deposits generally are not. An estate tax treaty, where one exists, can improve the position considerably. See US estate tax for non-resident aliens.
What happens when a non-resident sells Canadian property?
The buyer or their solicitor is obliged to withhold on the purchase price unless you obtain a clearance certificate, so the practical work happens before closing rather than after. The certificate application reports the disposition and the gain and fixes the amount the authority requires to be held. Apply late and the withholding is computed on the gross price, tying up cash until a return recovers it. See the section 116 clearance certificate.
