The CRA has new guidance for individuals reporting their sale of a principal residence.
In the guidance the CRA says that it will not assess penalties for late-filing a principal residence designation for dispositions that occur during a transitional period where CRA will be communicating the new reporting requirements to taxpayers. This transitional period will also include dispositions that occurred in 2016. However, according to the CRA, there will be no relief for late-filing a principal residence designation in "the most excessive cases".
The guidance does not apply to trusts.
Finance announced on October 3, 2016, that individuals cannot claim the full principal residence exemption for a disposition of a principal residence in their 2016 taxation year, or later, unless they report the sale and designation of the principal residence in their income tax return for the year. Previously, the CRA did not require an individual (other than a trust) to report the capital gain in their tax return if the full gain was exempt.
The CRA may accept a late-filed election if a taxpayer satisfies the Income Tax Act’s "fairness provisions". Generally, the fairness provisions allow the taxpayer to request that the CRA accept a late-filed prescribed election within ten calendar years of the taxation year to which the election relates. The CRA's discretion for late-filed elections only applies to certain prescribed designations. A late-filed election is generally subject to a late-filing penalty of $100 per month, not to exceed $8,000.
Information is current to February 28, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500