Capital gains on sale of publicly listed shares showing up on NR4 slip for a non-resident

Tax Topics
1

I have a trust which disposed of some publicly listed shares (with no business in Canadian real property/Canadian resources) during the year for a capital gain. The trust has 3 beneficiaries. Each receives 1/3 of income and capital. One is a non-resident. All income is distributed to beneficiaries during the year.

I recently confirmed with CRA that the gains on the sale of publicly listed shares are not taxable Canadian property to the non-resident and therefore not taxable.

TaxCycle simply allocates the income distribution as 1/3 on the 2 T3 slips and also on the NR4 slip for the non-resident. Clearly this algorithm needs some adjustments to accommodate these kind of transactions. Is there some way to remove the capital gain and taxable capital from the NR4 slip? I suppose an override on the NR4 is one option.

Has anyone else encountered this and if so, how did they handle it?

2

It seems that TaxCycle is likely treating the transaction properly.

The sale of public shares by a non-resident may not be “taxable in Canada” to the non-resident, but the income may be taxable in their country of residence. The NR-4 is issued to report income to the non-resident to be used (if necessary) on their domestic tax return. A NR-4 does not get reported on a Canadian tax return, as theoretically it can not be issued to a Canadian resident.

I’m not sure I see a problem.