Yes. When a non-resident of Canada sells a home in Ontario, the Canada Revenue Agency requires 25 percent of the gross sale price to be held back at closing until the seller obtains a certificate of compliance, and the seller still has to report the sale and pay tax on any gain.
Residency in this context is a tax question rather than a citizenship one. The CRA weighs where a person's home, family and economic ties actually sit, which means a Canadian citizen living overseas can be a non-resident for tax purposes while a foreign national living in Toronto year round may not be. Everything below flows from section 116 of the Income Tax Act, and it turns on the seller's tax residency at the time of the sale.
The holdback is the part that catches people off guard, because it is calculated on the full sale price and not on the profit. A condo that sells for $700,000 triggers a $175,000 holdback even if the seller cleared very little after paying off the mortgage. The buyer carries the legal liability for remitting that money to the CRA, so in practice the lawyers on both sides keep the funds in trust instead of releasing them on closing day.
Filing form T2062 is what shrinks the number. The CRA reviews the estimated gain, the seller pays or secures the tax owing on it, and the agency then issues a certificate of compliance so the holdback is measured against the gain rather than the whole purchase price. Processing has been slow, often six months or more, and a seller who starts the request only after closing can wait a long stretch with a large sum frozen in a trust account.
Deadlines are tight. Notice of the disposition has to reach the CRA within 10 days of closing, and a late filing draws a penalty of $25 for each day it is overdue, with a floor of $100 and a ceiling of $2,500. A Canadian income tax return for the year of the sale is still required. That return is usually where a seller who was over-withheld finally recovers the difference.
One common mix-up is worth clearing up. Ontario's Non-Resident Speculation Tax is charged on purchases, so it does not apply to a non-resident who is selling. The federal restriction on residential purchases by non-Canadians works the same way and places no limit on selling a property already owned.
Related reading: Can a Non-Canadian Buy a Home in Toronto?, What Is the Non-Resident Speculation Tax in Ontario?, and Do You Pay Capital Gains Tax Selling Your Ontario Home?