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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13117
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am an american citizen living in Texas, My mother was a

Customer Question

I am an american citizen living in Texas, My mother was a Canadian citizen. Her only asset was a house. MY sister who is the executor states she has to deduct 25% for taxes from my share of the house. Is this correct?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: No.
Submitted: 2 months ago.
Category: Tax
Expert:  Robin D. replied 2 months ago.


Canada splits their income in into classes and your part of the sell would be in a Part XIII tax.

The usual Part XIII tax rate is 25%.

Part XIII tax is not refundable. Therefore, do not file a Canadian tax return to report the income.

Please accept my condolences.

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Customer: replied 2 months ago.
I understand that Canada splits their income into 2 classes. I also understood that if the money was derived from real property it was not taxed at 25% since capital gains tax was paid in the estate return. What does the Certificate obtained from the CRA do?
Expert:  Robin D. replied 2 months ago.

The CRA will issue a clearance certificate, under Section 116 of the ITA, with respect to the distribution if a non-resident of Canada receives a distribution from a Canadian estate and more than 50% of the fair market value of the estate is derived from Canadian real property, then the estate is required to report that distribution to the CRA within 10 days of making the distribution.

This is necessary as the ITA assumes a deemed disposition of the capital interest of the estate by the non-resident beneficiary and a deemed acquisition of the interest by the estate. The Canadian executor is therefore required to either withhold and remit 25% of the gross distribution to the CRA or obtain the clearance certificate. Failure to comply with the reporting requirements will result in

The Income Tax Act (ITA) requires an executor to withhold non-resident tax of 25% of the gross income distributed to non-residents of Canada, unless the recipient beneficiary resides in a country which is party to a tax treaty with Canada and subject to lower tax rates with respect to that income. There is a treaty with the US but it does not reduce the tax rate for Canada.

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