How to Get a Certificate of Compliance in Canada?

Getting a Certificate of Compliance in Canada is a mandatory step for any non-resident selling Canadian property. The process starts with filing Form T2062 with the Canada Revenue Agency within 10 days of your sale closing date. CRA reviews the application, calculates the estimated tax on your capital gain, and issues the certificate once payment or acceptable security is confirmed. Without it, the buyer’s lawyer holds back 25% of the full sale price and sends it directly to CRA.

This guide walks through every step of the process, what forms you need, what happens if you miss the deadline, and how to recover withheld funds after the sale closes.

What Is a Certificate of Compliance and Why Do Non-Residents Need It?

The Certificate of Compliance is a document issued by CRA under Section 116 of the Income Tax Act confirming that a non-resident seller has either paid the tax on their Canadian property sale or made arrangements to pay it.

Canada taxes non-residents on profits made from selling taxable Canadian property. Since non-residents live outside Canada, CRA cannot collect that tax after the money leaves the country. The certificate is how CRA secures the tax before funds are released. Without it at closing, the buyer or their lawyer must withhold 25% of the gross sale price, not 25% of the profit, but 25% of the entire amount the property sold for. On an $800,000 property that means $200,000 held back regardless of how small the actual tax bill turns out to be.

Non-residents selling Canadian real estate, private corporation shares, or other taxable Canadian property all fall under this requirement. Canadian citizens who have established non-resident status for tax purposes face the same rules when they sell property retained in Canada after leaving.

What Forms Do You Need to Apply?

The main form used to apply for a Certificate of Compliance is Form T2062, Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property.

A second form applies in specific situations. T2062 vs T2062A is a distinction that trips up many sellers. Form T2062 covers Canadian real estate dispositions. Form T2062A covers other types of taxable Canadian property including private corporation shares, partnership interests, and resource properties. Our blog on T2062 and T2062A: Which Form Applies to Your Sale breaks down exactly which form applies to each property type so you file the right one the first time.

Both forms require supporting documentation including the original purchase agreement, closing documents, renovation receipts, legal fees paid at purchase, and real estate commission invoices. Every document that increases your adjusted cost base or reduces your proceeds of disposition belongs in the submission package.

How to Get a Certificate of Compliance? Step by Step

Getting the certificate requires following a clear sequence with strict CRA deadlines.

Step 1: Gather Your Documents Before the Sale Closes

Start collecting documents as soon as you list the property. You need your original purchase agreement, all legal closing documents from when you bought the property, receipts for every capital improvement made during ownership, and any selling costs you plan to deduct. The more complete your package is before closing, the faster the CRA application moves.

Step 2: Calculate Your Estimated Capital Gain

Your estimated capital gain is the sale price minus your adjusted cost base minus your selling expenses. The adjusted cost base is your original purchase price plus legal fees at purchase plus all capital improvements. Renovation receipts that most sellers never tracked suddenly become worth real money here because every dollar added to the adjusted cost base directly reduces the taxable gain.

Step 3: File Form T2062 Within 10 Days of Closing

CRA requires Form T2062 to be filed no later than 10 days after the closing date of the sale. Filing before closing is the better option since it gives CRA time to process the application without triggering the full holdback. Our resource on the Missed T2062 10-Day Deadline covers exactly what happens when this window is missed and what your options are to recover from a late filing.

Step 4: Pay the Estimated Tax or Post Security

CRA will not issue the certificate until the estimated tax on the capital gain is either paid or secured through an acceptable arrangement. The tax is calculated at the applicable rate on the taxable portion of your gain. Once CRA confirms payment or security, the certificate moves to issuance.

Step 5: Receive the Certificate and Release Your Funds

CRA sends the Certificate of Compliance to the lawyer handling the transaction. The lawyer then releases the withheld funds to the seller. Processing time varies from several weeks to a few months depending on CRA’s current workload and how complete the original application was.

What Happens to the Withheld 25% While You Wait?

The 25% withheld by the buyer’s lawyer sits in trust until CRA releases it. If you filed Form T2062 before closing and CRA processes it in time, no holdback occurs at all. If the certificate arrives after closing, the lawyer releases the holdback once the certificate is in hand.

Many non-residents discover that the estimated tax paid during the certificate process was higher than the actual tax owed once the final return is filed. The difference comes back as a refund, but only after the final disposition return is filed and processed by CRA. This is a separate filing from the certificate application itself and is required even if the certificate has already been issued.

Certificate of Compliance vs General Tax Clearance

These two terms are not the same thing and confusing them causes real problems.

Item	Certificate of Compliance	General Tax Clearance
Governed by	Section 116, Income Tax Act	Section 159, Income Tax Act
Purpose	Property sale by non-resident	Estate or trust wind-up
Form used	T2062 or T2062A	TX19
Issued by	CRA	CRA
Who needs it	Non-resident property sellers	Legal representatives of estates
Triggered by	Property disposition	Death or trust termination

The Certificate of Compliance in Toronto under Section 116 applies specifically to non-residents disposing of taxable Canadian property. Annual property tax payments, HST remittances, and any other tax obligations have no bearing on this requirement.

How This Connects to Your Other Canadian Tax Obligations?

The Certificate of Compliance does not close your Canadian tax file. After the sale, you still need to file a Canadian income tax return reporting the final capital gain for the year. This return determines the actual tax owing, which may be lower than the estimated amount paid during the certificate process.

Non-residents who also earn rental income from Canadian properties need to manage both their Non-Resident Tax Filing obligations and the certificate application at the same time. Handling both under one roof prevents gaps in compliance and missed deadlines. For non-residents leaving Canada who also own property, the certificate requirement and Departure Tax Return planning often overlap and need to be coordinated carefully to avoid double reporting of the same gain.

Conclusion

Getting a Certificate of Compliance in Canada requires filing the right form on time, supporting it with complete documentation, and following through with the final disposition return after the sale closes. Missing any step in this sequence results in withheld funds, penalties, and a slower path to recovering your money from CRA.

Tax Return Filers manages the complete certificate process for non-resident sellers across Canada, from Form T2062 preparation and submission through the final disposition return and refund recovery, so nothing gets missed and your sale proceeds are released as quickly as the process allows.