A non-resident inter vivos trust distributes its shares of a private Canadian real estate corporation (Canco) in satisfaction of the capital interest of its sole non-resident beneficiary, which is taxable Canadian property. CRA stated:
In accordance to [sic] subsection 116(5), in absence of a Certificate of Compliance obtained by the non-resident seller, the purchaser may incur a liability in respect of the amount he ought to have withheld on the purchase price and remitted to the Receiver General. …[A]ssuming that the property disposed of is not a treaty-protected property.. the non-resident trust should obtain a Certificate…from the Minister pursuant to subsections 116(2) or 116(4). A request could be made by the trust in order to relieve the beneficiary of any liability he might incur in application of the rules in subsection 116(5) in respect of the distribution of Canco's shares.