CRA indicates that (in the absence of counter indicators) a statutory declaration of residence is sufficient for s. 116(5)(a) purposes

S. 116(5)(a) (and similarly s. 116(5.3)) indicates that a purchaser is not liable for a failure to withhold under s. 116 on a purchase of taxable Canadian property from a non-resident if “after reasonable inquiry” it “had no reason to believe that the non-resident person was not resident in Canada.” When asked whether this requirement was met if the purchaser obtains a statutory declaration from the vendor that the vendor is not a non-resident of Canada, and the purchaser has no reason to believe this to be false, CRA indicated that “obtaining such declaration would generally qualify as a reasonable inquiry” – and referred to “a known mailing address outside of Canada or any other indication of the vendor’s residence being outside Canada in the transaction documentation” as examples of circumstances that should put the purchaser on notice.

This question is odd as usually there is only a written representation of residency in the sale agreement, and no statutory declaration to that effect.

Neal Armstrong. Summary of 25 August 2017 External T.I. 2017-0703351E5 under s. 116(5)(a).