An Update to the Non-Resident Speculation Tax
We previously wrote about the Non-Resident Speculation Tax (NRST), explaining what it is, what it is applied to, and any refunds or rebates that may be available. In short, the NRST is the addition of extra taxation to the purchases of real property by foreign nationals.
Updates to the Non-Resident Speculation Tax
As of March 30, 2022, the Non-Resident Speculation Tax rate was increased to 20 percent and expanded province-wide. As a result, the NRST may apply on the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are foreign nationals or by foreign corporations or taxable trustees.
The NRST applies to:
- A semi-detached house;
- A detached house;
- Condominium unit;
- Townhouse; and
- Duplexes, triplexes, fourplexes, fiveplexes, sixplexes.
However, the NRST does not apply to land which contains rental multi-residential apartments buildings, commercial land, agricultural land, and industrial land.
The NRST applies to the value of the consideration of the residential property, meaning the purchase price of the transactions. For more information, visit the Ontario Government website.
Exemptions from the Non-Resident Speculation Tax
An exemption from NRST may be available in these situations:
- If the foreign national’s spouse is a permanent resident of Canada, he or she can jointly purchase a residence with the spouse. The spouse can also be a nominee or protected person.
- A nominated foreign national under the Ontario Immigrant Nominee Program at the time of purchase can be exempted from the NRST. In this case, the foreign national has certified they will apply or have already applied to become a permanent resident of Canada.
- A protected person can be exempted. A protected person refers to a foreign national who has refugee protection at the time of purchase.
To qualify for an exemption, the foreign national (and if applicable their spouse) must certify they will occupy the property as their principal residence.
The exemption applies if the Canadian citizen, permanent resident of Canada, nominee or protected person and his or her foreign national spouse purchased the property with other individuals who are Canadian citizens, permanent residents of Canada, nominees, or protected persons.
All transferees in the conveyance must also certify that they will occupy the property as their principal residence.
However, keep in mind that the exemption does not apply if the Canadian citizen, permanent resident of Canada, nominee, or protected person and his or her foreign national spouse purchased the property with another foreign national who is not a nominee or protected person.
Rebates available for the Non-Resident Speculation Tax
A rebate of NRST may be available for a foreign national who becomes a permanent resident of Canada. To qualify for this rebate, the foreign national must have paid the NRST and:
- become a permanent resident of Canada within four years from the date of the purchase or acquisition,
- hold the property alone or with their spouse (as defined above) only, and
- occupy the property, along with their spouse, if applicable, as their principal residence for the duration of the period that begins within 60 days after the date of purchase and ends when they make an application for the rebate or the rebate conditions have been met, whichever is later.
If the two named transferees are spouses of one another, only one of the spouses must become a permanent resident of Canada for the rebate to apply.
The rebate will not apply if a taxable trustee is a transferee in the conveyance of land.
All rebate applications must be made using the Ontario Land Transfer Tax Refund/Rebate form for NRST.
Supporting documentation will be required to substantiate all applications for rebate.
If you are required to pay NRST, or you’re unsure, we can help! Also, if you’re looking to apply for a rebate from the NRST, then call us today to learn more!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.