Non-Resident Speculation Tax

At Khan Law, we help you understand how the Non-Resident Speculation Tax (NRST) affects your property purchase in Ontario. This tax targets specific foreign purchasers investing in residential properties, particularly within Ontario’s Greater Golden Horseshoe area. Our experienced real estate lawyers offer trusted guidance to ensure your transaction remains compliant and financially sound.

Understanding the Non-Resident Speculation Tax in Ontario

Introduced on April 21, 2017, the Non-Resident Speculation Tax (NRST) is a provincial tax targeting certain residential property purchases in Ontario. The Ontario Non Resident Speculation Tax applies at a rate of 15% and affects properties located within the Greater Golden Horseshoe region. This tax is applicable when a foreign entity or a taxable trustee acting on behalf of a foreign entity purchases a residential property. The NRST is charged in addition to standard land transfer taxes and must be paid at the time of registration.

Who Needs to Pay the Ontario Non-Resident Speculation Tax?

You may be required to pay the Non-Resident Speculation Tax in Ontario if any purchaser listed on the property title is considered a foreign entity or is acting as a trustee for one. This rule applies even if only one buyer in the transaction meets the criteria.

A foreign entity includes:

A foreign national (someone who is not a Canadian citizen or permanent resident)
A corporation not incorporated in Canada
Or any corporation directly or indirectly controlled (under Canada’s Income Tax Act) by a foreign national or foreign-controlled company.

Importantly, all buyers on the agreement of purchase and sale are jointly and severally liable for the NRST. That means even if you are a Canadian citizen, you could be responsible for the Non-Resident Speculation Tax if your co-purchaser qualifies as a foreign entity and the tax isn’t paid. If your transaction involves a foreign national or corporation, it’s important to speak with a real estate lawyer in Ontario before closing. Legal guidance can help avoid unexpected liabilities related to the Ontario Non Resident Speculation Tax.

Non-Resident Speculation Tax Rebates in Ontario

You may be eligible for a rebate of the Non-Resident Speculation Tax (NRST) if you’ve purchased residential property in Ontario and meet certain conditions.

Here’s when a non resident speculation tax rebate can apply:

Permanent Residency: If you paid the NRST and become a permanent resident of Canada within four years of your purchase date, you may qualify for a rebate.
International Student: You might also be eligible if you’re enrolled full-time at a recognized post-secondary institution in Ontario for at least two continuous years from the purchase date. Students with disabilities qualify at a 40% course load.
Work Permit Holder: If you're legally working full-time in Ontario on a valid work permit for at least one continuous year, you may also qualify. This means at least 30 hours of paid work per week and a total of 1,560 hours over 12 months.

To be eligible, the property must be your primary residence and owned solely by you (or jointly with your spouse) starting within 60 days of purchase.

Important deadlines:

Most NRST rebate applications must be submitted within four years from the date the Ontario non resident speculation tax was paid.
If you're applying as a new permanent resident, you must submit your application within 90 days of gaining that status, and no later than four years and 90 days from the payment date.

If you think you may qualify, speak with a real estate lawyer at Khan Law. We’ll help you understand the process and make sure you don’t miss out on your rebate.

Who Is Exempt From the NRST in Ontario?

Certain buyers may be exempt from paying the Non-Resident Speculation Tax (NRST) when purchasing a residential property in Ontario. Below are the key exemption categories under the Ontario non resident speculation tax framework:

1. Ontario Immigrant Nominee Program (OINP) Nominees

If you're a foreign national nominated under the OINP and have applied, or certify that you will apply, for permanent residency in Canada, you may qualify for an NRST exemption at the time of purchase.

2. Protected Persons

Foreign nationals granted refugee protection under section 95 of the Immigration and Refugee Protection Act (Canada) may also be eligible for an exemption.

3. Spouses of Eligible Individuals

If you are the spouse of a Canadian citizen, permanent resident, OINP nominee, or protected person, you may be exempt from the non resident speculation tax Ontario. For this purpose, a “spouse” includes:

Individuals married to each other
Unmarried partners who have cohabited for at least three continuous years
Parents (natural or adoptive) of a child in a relationship of some permanence

Note: If multiple spouses are listed on title, at least one must meet the eligibility criteria above to potentially qualify for the exemption.

Additional Requirements for Exemption

To be exempt from the Ontario non resident speculation tax, all purchasers listed on the agreement must certify that the property will be used as their principal residence. This certification is mandatory to receive the exemption. Also, any exemptions available under the Land Transfer Tax Act (LTT), such as those for corporate transfers between affiliated entities, are also applicable to the NRST.

Situations Where the Exemption Does Not Apply

An exemption will not be granted if the property is purchased jointly by an eligible individual (e.g., a permanent resident) and another foreign national who does not meet the exemption criteria. In this case, the land transfer tax and NRST are both payable. Before making a purchase, it's important to speak with a real estate lawyer at Khan Law to assess your eligibility for an NRST exemption and ensure your transaction complies with Ontario regulations.

How the NRST Is Calculated?

The NRST n Ontario is calculated as 15% of the purchase price of a residential property. If you're buying a mixed-use property, the tax only applies to the portion of the price that relates to the residential component.

Which Properties Are Subject to the Non-Resident Speculation Tax?

The non resident speculation tax Ontario applies to transfers of land located within the Greater Golden Horseshoe region. It covers residential properties containing one to six single-family units, including:

Detached homes
Semi-detached homes
Townhouses
Condominium units

If you’re purchasing multiple condo units, each unit is considered a separate single-family dwelling and may be taxed individually under the Ontario non resident speculation tax.

Areas Where the NRST Applies

Toronto, Peel Region (Brampton and Mississauga), York Region, Halton Region
Durham Region, Hamilton, Guelph, Waterloo
Niagara, Kawartha Lakes, Barrie, Orillia, Brant County and Brantford
Dufferin, Haldimand, Peterborough (City and County), Northumberland
Simcoe County, Wellington County

Residential properties such as duplexes, triplexes, fourplexes, and similar multi-unit structures (up to six units) also fall under the non-resident speculation tax in Ontario.

Properties Not Affected

The NRST does not apply to land used for:

Rental apartment buildings with more than six units
Agricultural purposes
Commercial or industrial use

If you’re unsure whether the property you’re purchasing falls under the non resident speculation tax Ontario, it’s important to consult with a real estate lawyer at Khan Law before closing.

What Happens If You Avoid the Non-Resident Speculation Tax in Ontario?

All property transfers in Ontario are subject to audit by the Ministry of Finance, especially when a non resident speculation tax (NRST) may apply. This includes reviewing trustee relationships and transactions involving multiple conveyances to detect attempts to avoid the tax. If you are acting as a taxable trustee for a foreign entity, or structure your transaction in a way that appears designed to bypass the Ontario non resident speculation tax; you could face serious penalties. Consequences include substantial fines, penalties, and in extreme cases, imprisonment.

Late Payments and Interest

If you fail to pay the non resident speculation tax Ontario on time, interest will begin to accumulate 40 business days after a complete rebate or refund application is received by the Ministry. Interest rates, as last noted by the Ministry of Finance, are:

6% on unpaid NRST owed to the Ministry
0% on eligible NRST rebates and refunds
3% on refunds resulting from successful appeals or objections

These interest rates align with the general rules that apply to Land Transfer Tax (LTT) refunds in Ontario. Given the legal and financial risks, it’s critical to speak with a qualified real estate lawyer to determine if the non-resident speculation tax applies to your situation, and to ensure full compliance with provincial tax laws.

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