We complete the sale of our house before returning to the UK next Friday and are thoroughly confused about whether or not we are going to have an issue with tax withholding on the proceeds of the sale of our house. I have spoken to some accountants and had a telephone conversion with CRA who have both stated that since we are selling our primary residence and that we will both be in Canada on the day of (and for 3 days after) the sale that issue of tax withholding should not arise. I should also mention that it is unfortunately the case that we are making a substancial loss on the sale.

But looking at a CRA link on establishing residence I am concerned by the section of evidence of intention to permanently sever residential ties. Is the principal residence excluded in subsection 128.1(4)b) of the act.

Or we have noticed that effective from 2009 a new procedure appears to be in place in which tax treaty protected property is excluded from the need for a section 116 certificate. The buyers just need to fill in form T2062C and submit it to CRA within 30 days. Does this cover our situation.

Hope I'm not grasping at straws, but I have heard that is taking between 6 and 12 months for CRA to issue certificates to allow the relase of a tax withholding.

Will your lawyer not just release all the funds on the day of sale? You are still technically PR's on that day.

I presume you 'happened to mention' to your lawyer that you are leaving the country? What does he think - can he liaise with a tax specialist on your behalf? (Really - you would think this would come under his role of advisor to you)

Make sure you come back and tell us what happens - 'cos this has been debated so many times before and none of us are any the wiser!

We sold our house in Toronto and moved back to the UK 4 or 5 days after the deal closed. There was no withholding tax we just got our cheque from the lawyer and headed home all very straightforward.

So long as you are still resident when the sale closes you should be OK. If several accountants told you this as well as CRA, why are you still questioning it?

Two reasons. We are on TWPs rather than PRs and the experience of some others going back to the UK with TWP status has been that some lawyers deem a TWP holder to be non resident and insist of making the withholding to protect their butts

Also, my situation is slightly different in that my family are still here but I have already been working back in the UK for a couple of months, employed by the UK side of my company, although I am currently back working in Calgary for several weeks. According to one accountant this still makes me resident in Canada from the point of view of paying Canadian income tax because I have not severed my residential ties with Canada, but there appear to be multiple definitions of "resident".

You only gave half the story then. Difficult for anyone on here to be able to make suggestions on that basis. Also on here you'll get opinions, none of which carry any weight with CRA. You should perhaps ask the lawyer dealing with your sale what they propose to do.

You could also ask CRA for a determination using this form
http://www.cra-arc.gc.ca/E/pbg/tf/nr73/nr73-08e.pdf

Residence status for immigration purposes is not the same as residence for tax purposes.

You are still resident in Canada for tax purposes so just say so (I don't know how you disclose this in AB).

The purpose of the withholding tax is to ensure that non-residents pay tax on any capital gain. As this is your principal residence there is no tax and so no worries.

Cheers. Just needed a warm pat on the back to calm the nerves. This palaver is just so stressful.

Just had a phone call from our lawyer who has said the CRA have just confirmed to him that there is no need to withhold any tax so hopefully all is fine.

We signed all the documents yesterday and during the meeting the lawyer said that he was still waiting to hear from CRA and that he might have to withhold the money since he had to the last time he dealt with someone leaving Canada to go to the US, 5 years ago. Our hearts dropped. The key issue appears to be to make it absolutely clear that you are resident on the day that the sale goes through. Spending a few days in a motel after the sale appears to be money well spent. And also lean hard on the lawyer to ensure that they get up to date info from CRA.

We are never moving country ever again

WHOOHOO!!! House sale completed yesterday and we got our hands on all the dosh

New owners thanked us in person for selling them the house instead of the people who made the other offer.

Just a couple of days to go in the Days Inn in Cochrane then back to sodding Britain Last stumbling block to go will be explaining 12 large suitcases for 3 people to British Airways (We couldn't fit everything into the 40ft hi-cube container).

So in the words of the late great Douglas Adams, "So long and thanks for all the fish".

Good luck on your returning to the UK, and prepare to pay for excess baggage.

Thanks for the good wishes. More worried about whether or not BA will take all the bags than the cost (Employer is paying but we might have some discussions about the definition of reasonable amounts of excess baggage ). Think plane on Monday will be pretty empty though.

Best wishes to you, P and A for you return. Hope you all settle back in nice and easily, and can think back fondly of the whole experience in due course!

Have a good last weekend here and a safe flight.