Humber/Ontario Real Estate Course 2 Exam Practice

What is the buyer's best course of action if they discover the seller is a non-resident of Canada and significant capital gains tax is owed?

1. Obtain a statutory declaration

2. Seller agrees to pay tax within 90 days

3. Buyer pays Ministry of National Revenue

4. Lawyer remits tax on behalf of seller

5. Non-resident certificate

6. Remit payment over time

The correct answer is: Buyer pays Ministry of National Revenue

If a buyer discovers that the seller is a non-resident of Canada and significant capital gains tax is owed, the best course of action for the buyer is to pay the Ministry of National Revenue directly. Non-resident sellers are subject to withholding tax on the sale of Canadian property, so the buyer is responsible for remitting this tax to the government on behalf of the seller. This ensures that the tax obligations are met and that the buyer is not held liable for any outstanding taxes related to the sale. Options A, B, D, E, and F are not the best course of action in this scenario. A statutory declaration is a statement made under oath, typically used to verify certain facts or information, but it is not directly related to paying capital gains tax for a non-resident seller. The seller agreeing to pay the tax within 90 days may not be as secure as the buyer paying directly to the Ministry of National Revenue. Having a lawyer remit the tax on behalf of the seller could add unnecessary complexity to the process. A non-resident certificate is not typically used in this situation, as the focus is on paying the capital gains tax directly. Remitting payment over time may not be the most efficient or effective way to address the immediate tax obligation that a non-resident seller would have.