What must a buyer do regarding non-resident sellers concerning tax obligations?

When dealing with non-resident sellers, a buyer has specific obligations under tax regulations. One of these obligations is to ensure that appropriate tax measures are taken to secure the government's interests in regard to the seller's potential tax liability.

The correct approach for a buyer is to either deduct tax from the seller's proceeds or obtain a clearance certificate. This is essential because non-resident sellers may be subject to Canadian taxes on any capital gains derived from the sale of real property. The buyer acts as a withholding agent, ensuring that the taxes owed by the seller are accounted for during the transaction. By either deducting the appropriate tax amount from the proceeds or obtaining a clearance certificate from the Canada Revenue Agency (CRA), the buyer mitigates the risk of being held liable for the seller's unpaid taxes.

This necessity stems from tax compliance legislation that requires buyers to take responsible steps when purchasing property from non-residents. Failure to adhere to this requirement could lead to significant financial implications for the buyer, including being responsible for paying those taxes out of pocket if proper measures are not taken.

Options suggesting to ignore the seller's status or simply requiring a notarized statement do not fulfill the legal obligations imposed on buyers. Similarly, paying a flat fee to the CRA does not address