Buying Canadian Commercial Property From a Non-Resident Vendor

1. Identify the exact vendor and property interest

Compare the registered title owner, agreement vendor, beneficial owner, signing authority and tax-reporting person. If the purchase includes a business, equipment, shares, partnership interests, leases or other assets, document the transaction perimeter separately.

A Canadian address, corporation or bank account does not by itself resolve every residency question. Obtain counsel-led representations and supporting evidence appropriate to the facts.

2. Make reasonable residency inquiry part of diligence

Section 116 contains purchaser-liability rules and exceptions that depend on detailed facts. CRA's procedures discuss reasonable inquiry into the vendor's country of residence and the consequences when a certificate is unavailable.

Counsel should determine the inquiry, representation, statutory declaration, evidence and reliance required. A brokerage contact record or statement that an owner is Canadian is not a legal residency conclusion.

• Registered and beneficial owner
• Country of tax residence
• Entity jurisdiction and control
• Authorized signatories
• Residency representations
• Certificate and cooperation covenants

3. Understand what the certificate does—and does not do

CRA issues certificates for a particular vendor, purchaser, property and reported disposition after the required information, payment or security is accepted. CRA explains that the certificate protects the purchaser from further section 116 liability for the particular notice and disposition covered.

A certificate is not a title opinion, environmental clearance, GST ruling, property valuation or confirmation that every included asset is covered. Match the certificate particulars and limit to the final agreement and closing statement with counsel.

4. Control the no-certificate scenario in writing

CRA states that a purchaser may become liable to pay a specified amount on behalf of a non-resident vendor when the statutory conditions are met and an applicable certificate is unavailable. The purchaser may withhold from the purchase price in the circumstances described by section 116.

The agreement should allocate responsibility for the certificate, information requests, payment or security, extensions, withholding, remittance, trust conditions, interest, costs and post-closing cooperation. Counsel—not the brokerage—determines the required amount and deadline.

5. Do not use a generic withholding percentage

CRA's section 116 circular distinguishes different property categories, certificate limits and purchaser-liability provisions. Depreciable property, real property held as inventory and other included assets can follow different statutory calculations.

Ask the buyer's accountant and counsel for a written closing instruction based on the final allocation and certificate. A percentage copied from another transaction can be materially wrong for the property and structure.

6. Treat treaty-protected property as a specialist conclusion

CRA describes treaty-protected and treaty-exempt property and provides Form T2062C for specified purchaser notifications. Related-party status, the applicable treaty, the nature of the property and notification timing can affect the analysis.

Do not waive a certificate or withholding solely because a vendor refers to a tax treaty. Canadian counsel and the tax advisor should confirm the provision, evidence, relationship and filing steps.

7. Resolve GST/HST independently

CRA states that commercial real-property sales are generally taxable unless a specific exception applies. The purchaser's registration and intended commercial use, the vendor's registration or non-resident status, and mixed-use facts can affect collection, self-assessment and input-tax-credit reporting.

Have the agreement and statement of adjustments state the intended treatment and required evidence. A section 116 certificate does not resolve GST/HST.

8. Preserve the complete acquisition review

Continue ordinary title, registered-interest, planning, permit, environmental, building, lease, income, insurance and financing diligence. Non-resident tax controls do not compensate for a property that fails its intended use or investment case.

Coordinate access and document conditions so legal and tax review does not consume the time needed for physical, environmental, financing and occupancy verification.

9. Reconcile closing and ownership transition

Before closing, compare the certificate, vendor identity, purchaser identity, legal description, price, allocation, included assets, GST treatment, adjustments and trust conditions. Record unresolved differences and the advisor responsible for each decision.

After closing, retain the certificate or remittance record, residency evidence, legal opinions where provided, final adjustments and CRA correspondence with the acquisition file. Transfer leases, deposits, operating records, contracts and notices through a separate property handoff.

10. Keep brokerage and professional roles clear

Commercially can help define the acquisition requirement, identify public and qualified private opportunities and coordinate property information. The buyer's Canadian lawyer and tax advisor control residency inquiry, section 116, treaty, GST, withholding and remittance conclusions.

This guide is general education, not legal, tax, accounting, lending or investment advice. It does not establish reasonable inquiry, calculate a withholding or determine whether a certificate or treaty exception applies.