What is the Non-Resident Speculation Tax?
The NRST is a 15% tax that the province of Ontario has imposed on certain foreign buyers of residential property in the Greater Golden Horseshoe area. With the average price of a detached home in Toronto in the $1.5 M range, foreign buyers may be required to pay over $200,000 in NRST.
Why is Ontario Imposing this tax?
In words of the Minister of Finance upon introducing the province’s Budget on April 27, 2017: “The government is concerned that non-resident investors – who are not planning on living in the province – have been purchasing Ontario homes primarily for speculation purposes.” Interestingly, the province has not cited any data or statistics to support introduction of the NRST.
What properties does the tax apply to?
The tax applies to purchases of land containing between one and six single-family residences, including detached houses, semi-detached houses, townhouses and condos. It does not apply to multi-residential rental apartment buildings with more than six units, or agricultural, commercial or industrial land.
Who does the tax apply to?
The tax applies to buyers who are not Canadian citizens or permanent residents, non-Canadian corporations and taxable trustees for purchases of residential property in the Greater Golden Horseshoe area. That area includes the Greater Toronto Area, and surrounding regions such as Niagara, Waterloo, the counties of Haldimand, Brant, Wellington, Dufferin, Simcoe, Peterborough, Northumberland and the Kawartha Lakes area.
Non-Canadian corporations are defined as those: not incorporated in Canada; incorporated in the country but controlled by a foreign national or corporation and with no shares listed on a Canadian stock exchange; or controlled directly or indirectly by a foreign entity.
Taxable trustees are defined as either a foreign entity holding a title in trust for beneficiaries or a Canadian citizen, or a permanent resident, or a corporation holding a title in trust for foreign beneficiaries.
Who gets an exception?
The tax will not apply to:
- The principal residence for a foreign national under the Ontario Immigrant Nominee Program, which is designed to help employers having trouble finding qualified workers in Ontario.
- A joint purchase by a foreign national if their spouse is a Canadian citizen, permanent resident, refugee or exempt under the Ontario Immigrant Nominee Program.
- Purchases by a trustee of a mutual fund trust, real estate investment trust or specified investment flow-through trust.
Who gets a rebate?
Rebates (with interest) will be granted to the following people if they either exclusively hold the property or hold it jointly with their spouse and it has been used as their principal residence:
- A foreign national who becomes a citizen or permanent resident within four years of the purchase.
- A foreign student who has been enrolled full-time for at least two years after the purchase
- A foreign national who has legally and continuously worked full-time in Ontario for a year from the date of purchase.