Section 116 Certificates Of Compliance: Pandemic Edition

Section 116 of the Income Tax Act (Canada) is a popular subject among tax commentators as it is fraught with pitfalls for the unwary. However, it is worth revisiting due to some procedural accommodations that the Canada Revenue Agency (the "CRA") has made in light of the Covid-19 pandemic.

Briefly, Section 116 imposes an obligation on non-resident vendors (including deemed non-residents) ("vendors") to give notice to the CRA of (and in so doing apply for a certificate of compliance (a "Certificate") in respect of) a disposition of "taxable Canadian property" ("TCP") and/or certain other prescribed property (other than "excluded property") either before or within 10 days of the disposition. A corresponding obligation is imposed on purchasers (whether resident or non-resident) of such property to withhold and remit a portion of the purchase price (25% or 50%, depending on the type of property) to the Receiver General for Canada (the "RGC") on account of the tax