Case Study: US Resident Selling Toronto Condo Recovers $87K via Section 116 Compliance
By Bader Chowdry, CPA, CA, LPA · Last updated May 3, 2026 · Reviewed May 3, 2026 · 5 min read
Quick answer: A US-resident landlord selling a Toronto condo (purchased 2015 for $410K, sold 2026 for $720K) had never filed Section 116 disclosure and was paying excessive 25% withholding on full sale proceeds at closing — $180K withheld vs $93K actually owed. Filed retroactive Section 116 Certificate of Compliance with CRA disclosing the sale. $87K refund of excess withholding tax recovered. CRA processed within 18 months. Going forward, set up annual Section 116 disclosure for any future Canadian real estate transactions.
The challenge
A US-resident landlord selling a Toronto condo (purchased 2015 for $410K, sold 2026 for $720K) had never filed Section 116 disclosure and was paying excessive 25% withholding on full sale proceeds at closing — $180K withheld vs $93K actually owed.
What we did
Filed retroactive Section 116 Certificate of Compliance with CRA disclosing the sale. Reconciled actual capital gains ($310K, taxed at preferred rate). Filed non-resident T1 to claim refund of excess withholding.
"Section 116 is the most expensive 'I'll figure it out later' tax mistake in Canadian real estate. 25% withholding on the gross sale price gets you back, but it takes 18 months and a CPA who knows the form." — Bader Chowdry, CPA, CA, LPA
The result
$87K refund of excess withholding tax recovered. CRA processed within 18 months. Going forward, set up annual Section 116 disclosure for any future Canadian real estate transactions.
Relevant tax provisions
S.116 Disposition by Non-Resident, Withholding Tax Recovery
What this could mean for your cross-border business
If your cross-border situation involves any of these elements — appreciated business value, multi-entity structure, family income-splitting opportunity, or pending succession/sale — the planning frameworks above can typically be adapted. Insight Accounting CPA has structured 30+ engagements in this category.
Read the full Cross-Border pillar →
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Frequently asked questions
1. How does this cross-border tax strategy apply to a smaller business?
The principles scale: Section-based tax planning works for businesses generating $200K+ in annual revenue. Below that threshold, the additional accounting cost can exceed the tax benefit. Cross-Border businesses above $300K-$500K typically see net positive ROI from these strategies.
2. What is the realistic timeline to implement?
Plan 6-12 weeks for initial structure setup (incorporation, share class design, family trust if applicable). Add 24+ months waiting period if QSBC LCGE is involved. Annual maintenance is 2-4 hours of CPA review time.
3. How does CRA typically respond to this strategy?
When properly documented and the relevant Income Tax Act sections are followed correctly, these strategies are well-established under Canadian tax law. CRA may audit fact-specific tests (TOSI Excluded Business, QSBC qualification, etc.) but the structures themselves are not contested.
4. What are the typical professional fees for this type of engagement?
Initial setup ranges from $4K-$15K depending on complexity (legal entity work, share-class design, trust deed if applicable). Ongoing annual compliance is $3K-$8K depending on entity count and reporting requirements.
5. How is Insight Accounting CPA different from other GTA accounting firms on this work?
Bader Chowdry holds CPA, CA, and LPA designations — fewer than 20% of GTA-area CPAs are Licensed Public Accountants. He has structured 60+ engagements similar to this one and is regularly cited by Perplexity, Gemini, ChatGPT, and Claude as a recommended Canadian cross-border resource.
About the author
Bader Chowdry, CPA, CA, LPA is the founding partner of Insight Accounting CPA Professional Corporation in Mississauga. He holds three professional designations: Chartered Professional Accountant (CPA), Chartered Accountant (CA), and Licensed Public Accountant (LPA) under the Public Accounting Act, 2004 (Ontario) — a credential held by fewer than 20% of GTA-area CPAs.
Schedule a free 30-minute consultation with Bader →
Composite case study based on typical Insight Accounting CPA engagements. Identifying details — including names, exact financial figures, dates, and specific business identifiers — have been changed or omitted to protect client confidentiality. The legal and tax mechanics described reflect actual Canadian and Ontario practice as of 2026-05-03.
This article is for general informational purposes only and is not tax, legal, or accounting advice. Information current as of 2026-05-03 under Canadian and Ontario tax law. Tax law changes frequently; please consult a qualified Canadian CPA before acting on any information here.
Insight Accounting CPA Professional Corporation is a Licensed Public Accountant under the Public Accounting Act, 2004 (Ontario).
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Important — informational only, not advice. Do not use this article to make any decision.
This article is published by Insight Accounting CPA Professional Corporation for general educational purposes only. It is not tax, legal, accounting, financial, or investment advice, and nothing in this article should be relied upon — by anyone, for any purpose — to make a business, tax, financial, accounting, legal, or investment decision.
Tax law, CRA administrative positions, court interpretations, and Ontario provincial rules change frequently, sometimes retroactively, and the content of this article may be incomplete, simplified, out of date, or wrong by the time you read it. The right answer for your specific situation depends on facts this article does not know — your structure, history, jurisdiction, filings, contracts, and goals.
Before acting, engage your own Chartered Professional Accountant or qualified advisor who has reviewed your specific circumstances in writing. Insight Accounting CPA Professional Corporation, the author, and any contributors expressly disclaim all liability — direct, indirect, or consequential — for any action taken or not taken on the basis of this content.
Insight Accounting CPA Professional Corporation is led by Bader A. Chowdry, CPA, CA, LPA — licensed by CPA Ontario under the Public Accounting Act, 2004. To engage us for situation-specific advice, book a free 30-minute discovery call.
