Ontario Non-Resident Speculation Tax (NRST) increased to 25% effective October 25, 2022
Effective October 25, 2022, Ontario’s Non-Resident Speculation Tax (NRST) increased from 20% to 25%.
The NRST is an additional tax applied on the purchase or acquisition of residential property located anywhere in Ontario by individuals who are foreign nationals, foreign corporations or taxable trustees.
A foreign national is an individual who is not a Canadian citizen or a permanent resident of Canada.
A taxable trustee is a trustee of a trust that has at least one trustee that is a foreign national or a trust that has a beneficiary who is a foreign national.
The NRST was previously 20% for purchase and sale agreements entered between March 30, 2022 to October 24, 2022. Prior to March 30, 2022, it was 15% and it only applied to residential properties located in the Greater Golden Horseshoe Region of Ontario.
EXEMPTIONS – certain foreign nationals may be exempt if they meet various criteria. For details, go to https://www.ontario.ca/document/land-transfer-tax/non-resident-speculation-tax.
Facts and Notes to Know Who is Charged with NRST:
The NRST applies to the entire value of the consideration if any one of the purchasers or transferees is a foreign national, foreign corporation or taxable trustee. So, if four people (three Canadian citizens and one foreign national) jointly purchase a residential property in Ontario, the entire value of the consideration is subject to the NRST. All of them become liable for this tax. NRST is payable at the time of the registration of a conveyance. Registrants who fail to pay NRST may be assessed for tax, penalty and interest, even if they may be eligible for a rebate in the future.
Rebates:
Rebate of NRST may be available if a foreign national goes on to become a permanent resident of Canada within four years of the date of purchase or acquisition. The individual must hold the property alone or with their spouse, and must have already paid the NRST. The Ontario Land Transfer Tax Refund/Rebate Affidavit form must be used to apply for the rebate. Note that there is a deadline to apply - the application must be received within 90 days of becoming a permanent resident of Canada.
The above information is of a general nature only and should not be relied upon for specific situations. Call Marlies Y Hendricks, CPA at 416-766-3941 or submit email enquiry form below to set up a consultation.
