Ontario eases some land transfer tax payment requirements.
Ontario is easing its land transfer tax (LTT) payment requirements for some dispositions of beneficial interests in land held through certain types of partnerships and trusts. As of January 1, 2018, taxpayers who acquire or increase their beneficial interest in land due to a change in a qualifying partnership or trust's ownership will not have to pay their LTT until 30 days after the end of the calendar quarter where the ownership change occurred. Previously, this payment was due within 30 days of a change in beneficial ownership.
This measure was originally introduced in Ontario's 2018 budget on March 28, 2018. Final details concerning this change were released through recently published Regulation 343/18 made under Ontario's Land Transfer Tax Act.
These new rules only apply to trusts or partnerships that have at least 50 beneficiaries or partners who hold an interest in the land at the beginning of the year where the change in beneficial ownership occurs. These interests can be held either directly or indirectly through one or more other partnerships or trusts. The new measures will not generally apply if the qualifying entity itself acquires a beneficial interest in land. These changes are also not applicable to the Non-Resident Speculation Tax.
Taxpayers who acquire an increased interest in a qualifying entity and owe interest on late LTT payments will see interest begin to accrue on the 31st day after the end of the calendar year quarter in which the change in beneficial interest occurred.
Finally, tax preparers should be aware that while Ontario is accepting consolidated filing by a representative of a qualifying entity on behalf of partners and beneficiaries who hold an interest in that qualifying entity, the necessary forms are not yet available.
LTT generally arises when there is a disposition of a beneficial interest in land. LTT is payable by a person who, as a result of the disposition, acquires a beneficial interest in land or increases their beneficial interest in land (i.e. the purchaser).
Ontario has found it difficult to apply these rules to taxpayers using multi-tier structures involving partnerships and trusts. Partnerships and trusts are not considered "persons" under the LTT, and tax administrations must look-though these structures to determine which individual or corporation is liable for LTT on a disposition of a beneficial interest in land.
For more information, contact your KPMG adviser.
Information is current to May 29, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500