Requirement to Report Disposition of Principal Residence
For the first time Canadian taxpayers are required to report dispositions of their principal residence, even though no taxes are payable. The new rules apply for dispositions after January 1, 2016 so will have to be reported on 2016 T1s. Although there is no financial penalty for not reporting the house sale, by not reporting the Canada Revenue Agency will not be subject to the normal three-year limitation period for reassessing the tax return in the year of disposition. The reassessment period will be extended indefinitely, regardless of whether the taxpayer’s failure to report the sale was innocent or not.
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