Taxable Canadian property gains distributions

Non-residents who invest in Canadian mutual fund investments may be taxable on capital gains distributions made by mutual fund trusts and on capital gains dividends paid by mutual fund corporations from the disposition of taxable Canadian property (TCP). TCP includes real property in Canada, Canadian resource properties, and Canadian timber resource properties.

This non-resident tax applicable to TCP gains distributions only applies if more than 5% of the total capital gains dividend paid by a mutual fund corporation and more than 5% of the total capital gains distribution paid by a mutual fund trust are paid or designated for non-resident persons. Mutual fund trusts and mutual fund corporations have to maintain a separate TCP gains distribution account to track all capital gains for the disposition of TCP. The mutual fund has to report these amounts and the withholding tax on Form NR4, Statement of Amounts Paid or Credited to Non-Residents of Canada.