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Certificate of Compliance

There are many types of certificate of compliance at CRA and T2062 and its family are commonly-seen ones.

T2062 has a long title as “non-resident of Canada for a certificate of compliance related to the deposition of taxable Canadian property”, which indicates when a non-resident

  • sells a real estate property in Canada, or
  • assign a pre-development contract

Their representing lawyer will have to keep 25% of the sold amount and put it in a withholding account. This non-resident seller will have to get a T2062 in order to get the withholding money back.

This is actually a 2-step calculation/filing involved in the entire process and the T2062/T2062A just step 1. In this step, our accountant only calculates the gross capital gain from the property sale (purely selling price minus buying price) and use this gross income amount to apply for the certificate. Once CRA has received our application, a payment request is issued and we will pass it to the lawyer. The lawyer will use the money in the withholding account to make the payment to CRA. After the payment has been received and verified, CRA will issue the indeed certificate. With this certificate, the lawyer will release the rest of the money in the withholding account to the non-resident seller.

The 2nd step happens next Spring of the year when the property is sold and all our non-resident clients love this step. In this step our accountants include all the fees in the capital gain calculation (realtors’ commissions, lawyer’s fee, renovation cost, etc.) so the net capital gain is much smaller than the one in the previous step. Based on this net gain our accountant will file another tax return and from this return most of our clients will get their tax payment back.