As we have reported in our regular series of Legislative Updates, the Ontario housing market has been a focus of significant attention for legislators at all levels of government, including Tuesday's meeting between Federal Finance Minister Bill Morneau, Ontario Finance Minister Charles Sousa and Toronto Mayor John Tory.
Earlier today, the province announced a broad series of measures aimed at "making housing more affordable to homebuyers and renters." The province has provided a backgrounder on the sixteen measures included in the plan. Some of the measures will have immediate or almost immediate effect, upon the enactment of legislation. Measures include:
- a new 15-per-cent Non-Resident Speculation Tax (NRST), to be effective as of April 21, 2017;
- expanding rent control to all private rental units in Ontario, to be effective as of April 20, 2017;
- amendments to the Residential Tenancies Act; and,
- providing Municipalities with additional property tax tools, and updating the Greater Golden Horseshoe Growth Plan.
The Ministry of Finance has provided us with further technical details on the NRST, which can be found below.
As always, we will follow these developments and work closely with affected sections to ensure that the membership remains informed of important developments. We encourage our members to contribute to the discussion on this, and any other matter facing the profession. Members should feel free to contact us directly at advocacy@oba.org by including "Housing Policy" in the subject line.
Non-Resident Speculation Tax Effective April 21, 2017
On April 20, 2017, the Province announced a new 15% Non-Resident Speculation Tax (NRST) on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe by individuals who are not citizens or permanent residents of Canada or by foreign corporations (“foreign entities”) and taxable trustees. The implementation of the NRST is subject to the approval of the Legislature.
Upon the enactment of legislation, the NRST will be effective as of April 21, 2017.
The government recognizes that some purchasers may already have signed agreements of purchase and sale that do not close for a few months or longer. Therefore, binding agreements of purchase and sale signed by all parties on or before April 20, 2017, will not be subject to the NRST.
For information about the NRST, including exemptions and rebates, please see the Ministry of Finance’s (MoFs) NRST webpage.
This announcement will impact the usual practice followed in respect of the registration and payment of Land Transfer Tax (LTT) when NRST is also payable.
Effective April 21, 2017, all registered transfers must contain a statement expressly acknowledging that consideration has been given to the application of the NRST. Registrants are required to provide one of the following two statements:
The Non-Resident Speculation Tax does not apply to this transfer
The Non-Resident Speculation Tax applies to this transfer and has been paid to the Ministry of Finance, as confirmed by Receipt # *******
For registrations processed through Teraview, the applicable statement is to be inserted in Land Transfer Tax statement 9151 (Other remarks and explanations), which is found under the Explanations Tab.
For paper registrations, the applicable statement is to be inserted in paragraph 5 of the Land Transfer Tax Affidavit.
Taxpayers reporting unregistered dispositions of land to the MoF must expressly acknowledge in a covering letter that consideration has been given to the application of the NRST and whether or not it is payable on the reported transaction.
Electronic registrations
For an interim period, Teraview will not be able to collect the NRST. During this interim period, to ensure compliance with the legislation, affected purchasers/transferees should pre-pay both the LTT and the NRST directly to the MoF’s office in Oshawa. Once the MoF accepts the prepayment of the taxes, the transfer may be registered electronically without further payment of LTT or NRST.
The MoF will provide a letter confirming receipt of NRST with a receipt number.
Registrations made at Land Registry Offices
NRST payable on registrations that must be made at a Land Registry Office must be pre-paid directly to the MoF. If the transfer is subject to NRST, both the LTT and NRST should be prepaid directly to the MoF.
The transfer will be stamped with a direction to the Land Registrar that no further LTT is payable at registration and the MoF will also provide a letter confirming receipt of NRST.
Dispositions / Unregistered transfers
If a transfer will not be registered on title, a Return on the Acquisition of a Beneficial Interest in Land form, along with the payment of the LTT and the NRST must be submitted to the MoF within 30 days of the transfer of land. For more information, see Land Transfer Tax and the Treatment of Unregistered Dispositions of a Beneficial Interest in Land
How to pre-pay the LTT and the NRST to the MoF
The following documentation must be submitted to the MoF at the address below:
For transfers to be registered and unregistered transfers / dispositions:
- Cheque for the LTT and the NRST (certified, if not drawn on the solicitor's trust account), made payable to the “Minister of Finance”
- Copy of the Agreement of Purchase and Sale, with all schedules attached
- Copy of the draft Statement of Adjustments (if applicable)
- If the value of the consideration is based on the fair market value of the land, any appraisals or documentation that is evidence of the fair market value of the land
- Any additional documents as may be required to determine the value of the consideration
In addition, for transfers to be registered:
- Authorizing or Cancelling a Representative form(s), completed by each transferee
- Copy of the Document “in preparation” if registering electronically, or three copies of the Transfer/Deed if registration is done on paper
- If registration is done on paper, two completed Land Transfer Tax Affidavits.
Please submit the required documentation to the following address, either by mail, courier or in person:
Ministry of Finance
Compliance Branch
33 King Street West, 3rd Floor
Oshawa ON L1H 8H9
Please note that if a transaction is not subject to NRST, registration and payment of the LTT are to continue following the normal practice and may be completed using the Teraview system. Once the Teraview system is updated and able to accept payment of the NRST, payment of both these taxes may be made at the time of registration on the Teraview system.
Calculation of Tax:
The NRST may be calculated as follows:
| Value of the Consideration (VOC) |
Land Transfer Tax calculation |
| Up to and including $55,000 |
LTT=VOC x 0.005 |
| Exceeding $55,000 and up to $250,000 |
LTT= (VOC x 0.01) -$275 |
| Exceeding $250,000 and up to $400,000 |
LTT= (VOC x 0.015) -$1,525 |
| Exceeding $400,000 and up to $2,000,000 |
LTT= (VOC x 0.02) -$3,525 |
| Exceeding $2,000,000, where the land contains at least one and not more than two single family residences |
LTT= (VOC x 0.025) -$13,525 |
Value of the Consideration × 0.15 = NRST.
The LTT may be calculated as follows:
If you have any technical or administrative questions about the NRST, to whom it applies, or how to pay it, you may contact:
Manager, Land Taxes
33 King St. West, PO Box 625
Oshawa ON L1H 8H9
Phone: 1-866-668-8297
Fax: 905-433-5770
Teletype (TTY): 1-800-263-7776