If a seller of real property is a non-resident of Canada, section 116 of the Income Tax Act obligates the buyer to hold back and to pay to the CRA (within 30 days after the end of the month in which the closing occurs) 25% of the sale price unless the seller has applied for, obtained and delivered to the buyer a clearance certificate from Canada Revenue Agency certifying that the seller has paid any income tax payable or that he has made arrangements with the CRA to do so. This obligation is not optional – it’s mandatory. If the buyer fails to hold back and to pay 25% of the sale price as aforementioned, the CRA will pursue the buyer for the 25%. The application process is time consuming and the CRA does not usually respond quickly regardless of your client’s timing or his closing date. The application can and should be made as soon as possible before closing. The CRA will review the seller’s application and tax return filing history to determine if any and all taxes payable by him have in fact been paid. If the seller has not filed tax returns, the process may be even further delayed.