Effective January 1, 2016 the federal government decided to make it a requirement for anyone selling their principal residence to report it on their tax return. Even though there is no tax to pay, if you forget to report the sale of the property, you can be hit with penalties under the Income Tax Act. Failure to file a designation, failing to report the sale, or reporting late, can be subject to a maximum penalty of $8,000.00. In addition, failure to report the sale of a home may result in the Canada Revenue Agency having the ability to audit and reassess prior tax returns indefinitely, which would otherwise have been “off limits”. It has also been suggested that you may in fact lose the principal residence exemption for the capital gain, which would be rather harsh.
Here is a link to the Government website with details http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html
I’m not thrilled any more than you are, but that is what they want.