I act for a Canadian corporation that is buying all the shares of another Canadian corporation, that is a metal fabricator, from its US-based parent corporation (a C Corporation in the US.). I told them that unless there is a tax clearance from the CRA, they have to hold-back 25% of the purchase price, on account of Canadian taxes. The vendor’s lawyer is saying that, because the corporation being bought has never owned any real estate in Canada, we don’t have to withhold-is that right?

Cross Border Tax International Tax
TaxConnections Members... Answer This Question Want To be One of Our Tax Experts? Register Here

Tax Professional Answers

User Photo
Michael Atlas, CPA, CA
Yes, the lawyer appears to be correct, and no tax clearance from the CRA should be required.
The tax clearance and notification requirements in connection with property acquired from non-residents (section 116 of the ITA) are only applicable if the property acquired is “taxable Canadian property” (“TCP”).
Prior to changes that were made to the TCP definition in March of 2010, shares of any non-public corporation resident in Canada were automatically TCP.
However, as a result of the changes, shares will only be TCP at any particular time, if, at some time within 60 months prior to that time, more than 50% of the value of that share was derived, directly or indirectly, from Canadian real estate (or property related to real estate, such as timber, oil, or mining resource properties).
Given that, it does not seem like the shares are TCP, so there is no tax clearance required.
Leave a Comment 243 weeks ago

Meet Leading Tax Advisors

User Photo Peter J. Scalise

Federal Tax Credits & Incentives Practice Leader

New York, NY

User Photo John L Stancil

Tax Advisor/CEO

Lakeland, FL

User Photo John R Dundon, II EA

Tax Director

Denver, CO

User Photo Kevin Johnson MS, JD, LL.M, CPA


Philadelphia, PA

User Photo Brian Weaver, CPA, MBA

Managing Tax Consultant

Des Plaines, IL

User Photo William Rogers, CFP, MBA, EA

Rancho Santa Fe, CA


User Photo Jim Marshall, EA

President/ Tax And Financial Advisor

Scottsdale, AZ

User Photo Brett A Thompson, JD, CPA

Managing Tax Lawyer

Katy, TX

User Photo Charles Woodson, EA

Tax Advisor/Fiduciary Coach

San Diego, CA

User Photo John Richardson

Tax Lawyer

Toronto, Canada

User Photo Clifford Benjamin

Senior Tax Principal

Daytona Beach, FL

User Photo Kazim Qasim, EA, CTC

Managing Tax Advisor/CEO

Orlando, FL


View/Select our Current List of Tax Topics

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Previous PageNext Page



Learn from tax advisors, straight to your inbox

Update My Email Address
Contact Us Today