Ontario to tax residential property transfers to foreign buyers


Non-resident speculation tax

The Government of Ontario recently announced that, effective April 21, 2017, a 15 percent Non-Refundable Speculation Tax (NRST) would apply to the purchase or acquisition of an interest in a residential property located in the Greater Golden Horseshoe (GGH) by individuals who are not citizens or permanent residents of Canada, as well as by foreign corporations and taxable trustees. Binding agreements signed on or before April 20, 2017 will not be subject to the NRST.

Impact: The NRST is in addition to the existing provincial general land transfer tax, as well as any municipal transfer tax. A foreign buyer acquiring a residential property valued at over $2 million and containing at least one, but no more than two, single family residences in the City of Toronto will be facing a combined tax of 20 percent.

Affected buyers

The NRST applies to foreign entities and taxable trustees who purchase or acquire residential property in the GGH. A foreign entity is defined as being either a foreign national or a foreign corporation. In turn, a foreign national is an individual who is neither a Canadian citizen nor a permanent resident of Canada at the time of the purchase. A foreign corporation is a corporation:

  • not incorporated in Canada or in one of the provinces;
  • incorporated in Canada or in one of the provinces, but controlled in whole or in part by a foreign entity, unless the shares are listed on a Canadian stock exchange; or
  • controlled directly or indirectly by a foreign entity within the meaning of the Income Tax Act.

A taxable trustee includes both a foreign entity holding title in trust for beneficiaries and a Canadian citizen, a permanent resident or a corporation holding title in trust for foreign entity buyers.

Applying the NRST

The NRST applies to the transfer of land that contains at least one, and not more than six, single family residences, including unregistered dispositions of a beneficial interest in any residential property. The NRST is not applicable to multi-residential rental apartment buildings or agricultural, commercial or industrial land.

The tax applies to the full value of the consideration for the residential property where even one of the transferees is a foreign entity or taxable trustee. In situations where the value is only partially attributable to residential property, the NRST applies only to the residential property value. More importantly, each transferee is jointly and severally liable for any NRST payable even where the transferee is a Canadian citizen or permanent resident.

Exemptions and Rebates

Certain purchasers, including mutual fund trusts, real estate investment trusts and specified investment flow-through trusts, are exempt from the NRST. Exemptions are also available for certain individuals in the process of immigrating to Canada as well as individuals holding refugee status provided the residential property will be used as their principal residence.

A rebate mechanism will allow individual purchasers to claim back the NRST where their status as a foreign buyer changes within certain periods of time after the purchase date.

Interim payment measures

Although the NRST is not yet enacted legislation, Ontario has commenced collecting the tax. Ontario’s electronic registration system, which is operated by Teranet, will require an update before it can collect the NRST. Accordingly, where NRST is currently applicable, the tax, along with any Land Transfer Tax, should be prepaid directly to the Ministry of Finance’s Oshawa office prior to commencing the electronic registration process.

Further information can be found in the special bulletin issued by the Ministry of Finance and found online at

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