Canada non-resident capital gains: Section 116 clearance certificate, Part XIII withholding, taxable Canadian property (TCP), notional assessment. Trigger on: "non-resident selling Canadian property", "Section 116 Canada", "clearance certificate CRA", "TCP taxable Canadian property", "withholding…
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General reference only
This Guide is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for your personal facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.
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Non-residents taxed on capital gains from TCP
Non-residents of Canada are taxed on capital gains from Taxable Canadian Property (TCP); gains from non-TCP assets attract no Canadian taxIncome Tax Act (Canada), §2(3); §115
Canadian real property — TCP status
Always TCPIncome Tax Act (Canada), §115
Property used in a Canadian business (inventory, equipment) — TCP status
TCPIncome Tax Act (Canada), §115
Shares in a private corporation — TCP threshold (FMV derived from Canadian real property)
> 50% of FMV derives from Canadian real property in any of the preceding 60 monthsIncome Tax Act (Canada), §115
Shares in a public corporation listed on a designated exchange — TCP status
Not TCP (general rule)Income Tax Act (Canada), §115
CCPC operating business shares — TCP test
TCP if > 50% of FMV is Canadian real property; otherwise not TCPIncome Tax Act (Canada), §115
Options to acquire TCP — TCP status
TCPIncome Tax Act (Canada), §115
Partnership interests — TCP threshold (FMV derived from Canadian real property)
> 50% of FMV is Canadian real propertyIncome Tax Act (Canada), §115
Deadline to notify CRA of TCP disposition
Within 10 days of the sale (or before the sale if withholding obligation applies)Income Tax Act (Canada), §116
Buyer's withholding rate on gross proceeds — no clearance certificate produced (general)
25% of gross proceedsIncome Tax Act (Canada), §116
Buyer's withholding rate on gross proceeds — no clearance certificate produced (certain property)
50% of gross proceedsIncome Tax Act (Canada), §116
Withholding base for buyer obligation
Gross proceeds (not the gain)Income Tax Act (Canada), §116
Capital gains inclusion rate — general
50% (below threshold)Income Tax Act (Canada) (see ca-capital-gains skill)
Capital gains inclusion rate — above $250,000 threshold
Not applicable — proposed $250,000 higher-inclusion threshold was cancelled; current inclusion rate remains 50% for all capital gainsPM announcement March 21, 2025 cancelling proposed capital-gains inclusion-rate increase; CRA administration update; ITA s.38; LCGE increase retained at $1.25M for 2025
Capital gains threshold for higher inclusion rate
Not applicable — proposed $250,000 higher-inclusion threshold was cancelled; current inclusion rate remains 50% for all capital gainsPM announcement March 21, 2025 cancelling proposed capital-gains inclusion-rate increase; CRA administration update; ITA s.38; LCGE increase retained at $1.25M for 2025
Combined federal + provincial top rate on capital gains included portion (federal component)
Approximately 26%–27% (federal)Income Tax Act (Canada), §115
Non-resident individual filing form for TCP disposition year
Form T1 — Income Tax and Benefit Return (noting non-resident status)Income Tax Act (Canada), §115; CRA canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/disposing-of-certain-canadian-property.html
Standard Part XIII withholding rate on dividends paid to non-residents
25%Income Tax Act (Canada), §212
Treaty-reduced Part XIII withholding rate — portfolio shareholders
Typically 15% under most DTAsIncome Tax Act (Canada), §212; applicable Double Tax Agreement
Treaty-reduced Part XIII withholding rate — corporate shareholders holding 10%+
Typically 5% under most DTAsIncome Tax Act (Canada), §212; applicable Double Tax Agreement
Ownership threshold for reduced 5% corporate DTA dividend rate
10%+ corporate shareholdersIncome Tax Act (Canada), §212; applicable Double Tax Agreement
Taxable Canadian Property (TCP)
| Asset | TCP? |
|---|---|
| Canadian real property | Always TCP |
| Property used in a Canadian business (inventory, equipment) | TCP |
| Shares in a private corporation where > 50% of FMV derives from Canadian real property in any of the preceding 60 months | TCP |
| Shares in a public corporation listed on a designated exchange | Not TCP (general rule) |
| Shares in a Canadian-controlled private corporation (CCPC) — operating business | TCP if the 50% real property test is met; otherwise not TCP |
| Options to acquire TCP | TCP |
| Partnership interests where > 50% of FMV is Canadian real property | TCP |
When a non-resident disposes of TCP, they must notify the CRA and obtain a clearance certificate under ITA §116:
The withholding is on gross proceeds — not the gain. This can be extremely punishing on low-gain transactions.
Non-residents pay Canadian income tax on TCP gains at the same rates as residents, applied to the included portion of the gain (50% inclusion rate — see ca-capital-gains).
Combined federal + provincial top rates on the included portion: approximately 26%–27% (federal) + varying provincial rates.
Working paper only. The TCP classification for shares requires analysis of the corporation's assets. A §116 clearance certificate must be obtained BEFORE settlement or the buyer faces withholding liability. Engage a qualified Canadian tax adviser.
Other Canada computations in the OpenAccountants Tax Library.
Rendered from the facts database. General reference only — confirm with a qualified professional before acting.
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