The Canadian Income Tax Act contains rules which are intended to ensure compliance by non-residents who dispose of taxable Canadian property. These rules potentially shift the vendor’s tax burden to the purchaser by imposing a withholding obligation on the purchaser based on the gross purchase price payable for the taxable Canadian property. The non-resident vendor must then apply for a Clearance Certificate to reduce the withholdings and ultimately file an income tax return to obtain credit for any costs (legal fees, etc.) associated with the sale. Generally, any person (including another non-resident) who is purchasing a taxable Canadian property from a non-resident is required to withhold 33 1/3% of the gross purchase price and remit this to the Canadian government in respect of the non-resident vendors tax liability. The vendor may apply for a Clearance Certificate in advance of the closing date, which would permit the purchaser’s withholdings to be based upon 33 1/3% of the vendor’s estimated capital gains (determined before commissions and other costs of sale). If the sale of taxable Canadian property is not reported in advance of the transaction, the non-resident vendor is required to notify the Tax Department, by registered mail, within ten days after the date of sale. This notice will usually be made in the form of a Clearance Certificate application (form T2062). In these ‘post-closing’ Clearance Certificate applications, the purchaser withholds on closing 33 1/3% of the gross purchase price and then releases to the vendor any excess of the amount withheld over the ‘Certificate Amount’ (being one-third of the vendor’s estimated gain before selling expenses). A six to ten week delay in processing Clearance Certificates is not unusual. In computing the estimated capital gain on form T2062, outlays and expenses related to the sale, including real estate commissions and legal fees may not be claimed. These amounts may be claimed when the non-resident vendor files a Canadian income tax return for the calendar year that includes the disposition date. These filings generally result in a refund of tax to the non-resident vendors. Generally, the Canadian income tax return for an individual is due April 30th of the following year. Unlike the United States, extensions to file returns are not available. Late-filed returns are subject to penalties and interest on any amount unpaid by the filing deadline.