Humber/Ontario Real Estate Course 1 Exam Practice

Who imposes a tax liability on the buyer for taxes owed by a non-resident seller of Canadian real estate if the seller fails to pay such taxes?

1. Canada Revenue Agency.

2. The buyer's real estate agent.

3. The seller's legal counsel.

4. The municipal tax authority.

5. The provincial government.

6. The local escrow company.

The correct answer is: Canada Revenue Agency.

The Canada Revenue Agency (CRA) is the correct answer because it is responsible for the administration of tax laws in Canada, including those related to real estate transactions and specifically the implications of non-resident sellers. When a non-resident sells property in Canada, there are tax obligations that must be addressed, such as the Non-Resident Speculation Tax and Income Tax on the disposition of the property. If the non-resident seller fails to pay these taxes, the CRA has the authority to impose a tax liability on the buyer to ensure that the tax is ultimately collected. This ensures compliance with Canadian tax laws and protects the government's revenue. The other options listed do not have the authority to impose such tax liabilities. The buyer's real estate agent is primarily involved in facilitating the transaction and does not have tax enforcement power. The seller's legal counsel represents the seller's interests and does not impose taxes on buyers. The municipal tax authority typically manages local taxes after the property transaction and is not directly involved in the tax obligations of non-resident sellers. The provincial government does have a role in property and tax regulations, but the CRA specifically handles tax liabilities related to failed tax payments by non-resident sellers. Lastly, while local escrow companies may handle the funds and manage