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Hi Allan!
I’m seeking a personal tax planner on behalf of my mother, who is currently residing in Taiwan (she’s also a Canadian citizen) and has been filing her taxes as a non-resident of Canada. She has a house in Toronto which she’s been renting out for the last 30 years that she is now planning to sell. However, she is concerned about the capital gains tax implications, hence would like to consult a CPA/CA to understand how she can minimize her tax burden in the event of this transaction.
Hence, I would like to schedule a complimentary consultation with you to understand if you can help us in our mission.
Q: What documents can assist you in your initial assessment? I can prepare them beforehand so that you may have sufficient context is your assessment.
Q: When calculating capital gains tax burden, is only 50% of the accrued capital gains taxable on both the federal and provincial level? Does the 50% rule apply to both resident and non-resident taxpayers?
Q: As my mother is also a resident of Taiwan, can she leverage the Canada-Taiwan Tax Treaty to her benefit?
Q: Say a taxpayer is planning to sell a house, which will accrue $500,000 of capital gains, $250,000 of taxable capital gains. Which is the best strategy to sell the house that yields the lowest tax burden?
– Sell while she is deemed a resident of Taiwan, non-resident of Canada
– Sell while she is deemed a resident of Canada, non-resident of Taiwan
What would the estimated tax burden for each scenario be like?
Please let me know when is convenient to schedule a complimentary consultation with you to understand if you can help us in our mission.
Thank you!
Hi,
Thank you for your question! The following are the tax implications for your mother if she sells her Toronto property:
1. Your mother's lawyer will hold-back 25% of the sales proceeds in his Trust Account.
2. Your mother must file an application for a Certificate of Compliance in respect of the sale of her Toronto home. With this application, she will include a payment to the CRA for 25% of the capital gain. (The tax treaty between Taiwan and Canada does not reduce this tax rate).
3. The CRA will issue a Clearance Certificate after processing the application and collecting the payment of tax
4. Your mother will provide a copy of the Clearance Certificate to her lawyer
5. The lawyer will release the hold-back of tax to her (see step 1 above)
6. A Section 116 Non-Resident Return needs to be filed with the CRA to report the sale of the property
I am assuming that your mother is up-to-date with her tax filings (Section 216 Non-Resident Returns), and tax payments in respect of the rental income she receives each month. My services and fees are as follows:
1. Preparation of an Application for a Certificate of Compliance - $900
2. Preparation of Section 116 Non-Resident Return - $250
3. Disbursements are extra
I can answer your additional questions during a 30-minute phone consultation for a fee of $110 + tax. To book an appointment with me, please contact my assistant Sade: sade@madanca.com