On April 20, 2017, the Province of Ontario enacted a 15 per cent non-resident speculation tax (NRST) on the purchase or acquisition of properties in Metropolitan Toronto and its surrounding areas, referred to as the “Greater Golden Horseshoe” (GGH).
The GGH incorporates the greater Toronto area, including Toronto itself as well as Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Waterloo, Wellington and York.
Similar to the 15% NRST tax imposed for greater Vancouver area in British Columbia in August 2016, the Ontario NRST, which went into effect on April 21, 2017, is intended to hamper the bid-up by foreign buyers/corporations in the metropolitan Toronto residential housing markets. The announcement was included as part of the 16-point proposal introduced in the Ontario government’s Fair Housing Plan, which aims to bring stability to Ontario’s real estate market.
While the Ontario NRST became effective April 21, 2017, important to note that the enabling regulations for the Ontario NRST are still pending. Upon the enactment of legislation, the NRST will be effective as of April 21, 2017. The tax will be payable by:
a) individuals who are not Canadian citizens or permanent residents;
b) corporations formed outside Canada, or controlled in whole or in part by individuals who are not Canadian citizens or permanent residents; and
c) trustees who are either foreign entities, or who hold the land on behalf of individuals or corporations described in (a) or (b).
The pending status of the NRST regulations also means it is not certain yet whether or not the current “relocation transaction exemption” that currently exists under the Land Transfer Tax Act will be extended to the NRST.
As for what this means for our clients, we recommend that you continue business as normal with regard to sales documentation of relocations initiated after April 21, 2017 occurring within the Golden Horseshoe. You should also consult your own tax/legal advisors as to how best to proceed.