Working Group Q#11 - s.116

1. When is a certificate under s.116 of the Income Tax Act required in a real estate transaction?

2. Is the need to obtain a certificate under s.116 of the Income Tax Act tied to the type of property (i.e. residential, commercial, recreational)?

3. When is the s.116 certificate required to be delivered?

4. What is the correct amount of the holdback to be retained if a s.116 certificate is required but not available? (Select all that may apply)

5. What is the criterion to determine the holdback requirement (% of purchase price) in lieu of the certificate?

6. In regard to the funds withheld in lieu of a certificate: a. Who has the obligation to withhold the funds, according to the ITA?

6. In regard to the funds withheld in lieu of a certificate: b. Who typically withholds the funds according your practice?

7. There is an obligation to remit the funds withheld from the purchase price to CRA after closing even if you have not received the certificate. When are the funds required to be remitted to CRA?

8. Did you know that the Working Group on Lawyers and Real Estate has posted a precedent undertaking for when a s.116 ITA certificate is not available?

9. Did you know that LAWPRO's practicePRO has a s.116 ITA Flowchart for when a non-resident sells?

10. Which undertaking do you use if you require one?

11. If you are the payer of the funds to CRA, do you provide the other side with a copy of proof of payment?

12. When is the latest a party can apply for the s.116 certificate?

13. Who should apply for the s.116 certificate?

14. What topic would you like us to survey next?


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