Humber/Ontario Real Estate Course 1 Exam Practice

Which is NOT correct about non-residency and tax payments?

1. The buyer's lawyer will hold back funds if a tax certificate is absent before closing

2. The seller confirms via statutory declaration that they are not a non-resident

3. The buyer won't be impacted if the non-resident seller obtains a tax certificate

4. The ultimate responsibility for associated taxes rests with the buyer

5. The seller is responsible if they are non-resident and haven't prepaid taxes

6. The non-resident seller must provide necessary tax clearance to avoid holdback

The correct answer is: The ultimate responsibility for associated taxes rests with the buyer

The statement that the ultimate responsibility for associated taxes rests with the buyer is incorrect in the context of non-resident sellers. Typically, the responsibility for ensuring that taxes owed by the seller are settled falls on the seller, particularly if they are non-resident. In such situations, the legislation is designed to protect buyers from unexpected tax liabilities arising from the seller's lack of tax compliance. When dealing with a non-resident seller, it is crucial to ensure that the seller is in good standing with tax obligations to prevent tax issues from impacting the buyer after the transaction gets finalized. The implications of non-residency mean that sellers may have different obligations regarding tax certificates, and it is standard practice that the necessary documentation, such as tax clearance, should be provided by the seller to confirm compliance. Overall, the buyer does have responsibilities during the transaction, particularly concerning various due diligence aspects, but the primary liability regarding taxes, especially when a non-resident is involved, generally does not rest solely with them. The seller’s responsibilities include providing necessary documentation and ensuring that any taxes are resolved accordingly.