New Non-Resident Speculation Tax in Ontario

Written by Jane C. Helmstadter

The provincial government announced today that effective April 21, 2017, it is imposing a 15-percent non-resident speculation tax on the purchase or acquisition of interests in residential property located in the Greater Golden Horseshoe. The Greater Golden Horseshoe includes Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York. 

The tax will be payable by:

1. individuals who are not Canadian citizens or permanent residents;
2. corporations formed outside Canada, or controlled in whole or in part by individuals who are not Canadian citizens or permanent residents; and
3. trustees who are either foreign entities, or who hold the land on behalf of individuals or corporations described in (a) or (b). 

Residential property, for the purposes of the non-resident speculation tax, includes land that contains at least one and not more than six single family residences. The tax will not apply to multi-family residential apartment buildings as long as the apartment building has more than six apartments. Similar to land transfer tax, where the land contains both single family residences and non-residential premises, the tax will apply only to the single family residential component of the land. However, if there are multiple purchasers and any one of those purchasers is a foreign national, foreign entity or taxable trustee, the tax is payable on 100 percent of the purchase price for the whole property.

The tax does not apply to a trustee of mutual fund trusts, real estate investment trusts or specified investment flow-through trusts. It does apply to unregistered dispositions of residential property.

There are certain exemptions for persons who are refugees or fall under certain immigration programs. There are also certain rebates that may be available for persons who become Canadian citizens or permanent residents, are full-time students, or who work full-time in Ontario for certain periods. In each case, the property must have been used as the principal residence of the person.

Reporting and collection of the tax will be effected in a manner similar to land transfer tax.