The Government of Ontario Announces Amendments To Non-Resident Speculation Tax (NRST)
Effective on March 30th, 2022, the Non-Resident Speculation Tax (NRST) rate increased from 15% to 20% and expanded to all regions of the province. As a result, the NRST applies to the transfer of “designed land”, which is considered land that contains at least one (1) and no more than six (6) single family residences.
The NSRT applies in addition to the general Land Transfer Tax (LTT) in Ontario.
The NRST will continue to apply to individuals who are not Canadian citizens or permanent residents of Canada or by foreign corporations or taxable trustees.
Entities Subject To NRST
The NRST applies if any one of the transferees is a foreign entity or taxable trustee, regardless of their share of ownership. For example, if a transfer of residential property is made to four transferees, only one of which is a foreign entity, the NRST would apply to 100% of the value of the property.
Certain individuals will continue to be exempt from the NRST, including foreign nationals in the Ontario Immigrant Nominee Program (OINP), protected persons (refugees), spouses of Canadian citizens, or permanent residents of Canada.
Increasing the tax rate to 20% and expanding the tax to apply provincewide is an attempt by the Government of Ontario to deter non-resident investors from speculating in the housing market in hopes that home ownership will become more attainable to Ontario residents.
What Does This Mean For Ontario REALTORs And Clients?
If an agreement of purchase and sale entered into for the conveyance of land located outside of the Greater Golden Horseshoe region (GGH), or the assignment of such an agreement, on or before March 29th, 2022, there is no NRST payable.
As of March 30th, 2022 the NRST is applicable province wide.
The applies to all transfers of residential property that contains at least one and not more than six (6) single family residences. This includes detached homes, semi-detached, triplexes, duplexes, townhouses, and condominiums. It does not matter whether a single family actually resides there nor whether the property is rented or occupied by the owner; it remains taxable so long as it was designed for occupancy as the residence of a family.
The NRST does not apply to other types of land, such as land containing multi residential rental apartment buildings with more than six (6) units, agricultural, commercial, or industrial land.
You can visit the Government of Ontario’s NRST webpage for details regarding the transition provisions of the tax rate, the international student rebate, and the foreign workers rebate.
Source: OREA Website
Disclaimer: The information contained in this post is not meant to be relied upon as legal advice by REALTORS®, or others. Members wishing further clarity or advice should seek independent legal advice specific to their circumstances. Due to the quickly changing regulatory environment during the COVID-19 emergency, this document may not be current or accurate by the time it is read.
