- RESOURCES & PUBLICATIONS -

Morison KSi

The new 15% Ontario non-resident speculation tax

Overview of the tax

On 20 April 2017, the Province of Ontario announced a new 15% non-resident speculation tax (NRST) on the purchase of residential property located in the Greater Golden Horseshoe (GGH) region by individuals who are not citizens or permanent residents of Canada or by foreign entities and taxable trustees. The NRST applies in addition to the general land transfer tax in Ontario as well as the additional land transfer tax for the City of Toronto. Binding agreements of purchase and sale signed on or before 20 April 2017 are not subject to the NRST.

The GGH comprises the geographic areas of Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York.

The intention of this tax is to help cool down the housing market and is part of Ontario’s Fair Housing Plan, a comprehensive package of measures with a stated purpose of helping more people find affordable homes, increasing housing supply, protecting buyers and renters, and bringing stability to the real estate market.

The new Ontario NRST follows British Columbia’s introduction of a similar 15% property transfer tax that generally applies to transfers of residential property to foreign entities where the property is located in the Greater Vancouver Regional District.

Who is affected by the tax?

The 15% NRST will be imposed on foreign entities and taxable trustees that purchase or acquire certain residential property in the GGH.

A ‘foreign entity’ is either a foreign national or a foreign corporation:

  • A foreign national is an individual who is not a Canadian citizen or permanent resident of Canada.
  • A foreign corporation is a corporation that is one of the following:
    • Is not incorporated in Canada;
    • Is incorporated in Canada, but is controlled in whole or in part by a foreign national or other foreign corporation, unless the shares of the corporation are listed on a Canadian stock exchange; or
    • Is controlled directly or indirectly by a foreign entity for the purposes of section 256 of the Income Tax Act (Canada).

A ‘taxable trustee’ is a trustee that is:

  • A foreign entity holding title in trust for beneficiaries, or
  • A Canadian citizen, permanent resident of Canada, or a Canadian corporation holding title in trust for foreign beneficiaries.

Application of the tax

The NRST applies to purchases of land containing at least one and not more than six single family residences. The NRST does not apply to purchases of multiresidential apartment buildings containing more than six units, commercial land, agricultural land or industrial land. If the land transferred includes both residential property and another type of property, the NRST applies only on the purchase price of the residential property.

The NRST applies to the total purchase price for a transfer of residential property if any one of the purchasers is either a foreign entity or taxable trustee. Consequently, if several purchasers are purchasing the property together and one of the purchasers is a foreign entity or taxable trustee, then the NRST applies to the total purchase price. In addition, all the transferees are jointly and severally liable for any NRST payable.

The NRST also applies to unregistered dispositions of a beneficial interest in residential property.

NRST exemptions

Certain exemptions to the NRST are available, including:

  • A foreign national who is confirmed under the Ontario Immigrant Nominee Program (nominee) and the property is to be acquired as the foreign national’s principal residence
  • A foreign national who has the status of refugee
  • A foreign national who has a spouse who is a Canadian citizen, permanent resident of Canada, nominee or refugee if the foreign national jointly purchases residential property with that spouse as their principal residence.

NRST rebates

A rebate of the NRST may be available in the following situations:

A foreign national becomes a Canadian citizen or permanent resident of Canada within 4 years of the purchase date

A foreign national is a student who has been enrolled full-time, for at least 2 years from the purchase date, in an ‘approved institution’ as outlined by the Province of Ontario

A foreign national has legally worked full-time in Ontario for a continuous period of 1 year since the purchase date.

In order to be eligible for the rebate, the foreign national must hold the property solely or together with their spouse. Furthermore, the property must have been used as the foreign national’s, or foreign national and spouse’s, principal residence for the whole period.

Tax avoidance and offences

The Government of Ontario also announced that it will introduce anti-avoidance provisions to ensure that the NRST is reported and paid as required. This includes examining circumstances where Canadian citizens or permanent residents of Canada, as taxable trustees, hold property in trust for a foreign entity or are trustees where a beneficiary may be a foreign entity.

Failure to pay the NRST may result in a penalty, fine and/or imprisonment.


This article can be seen in Global Tax Insights, Morison KSi’s quarterly tax newsletter. Visit Morison KSi to view the complete newsletter.


    Back to publications

Join our newsletter

To subscribe to our newsletter, TaxTalk™ please enter your email address below.

Get in Touch

At McCarney Group we are always available to assist you.
If you have a question or would like to schedule a call or a meeting with one of our partners please contact us.

Contact Us   or   Join our Newsletter