Canada: Expansion of, increase in non-resident home buyers tax (Ontario)

The province has increased the tax to 20% (from 15%) of the purchase price for the transferred property.

The province has increased the tax to 20% (from 15%)

Ontario has expanded its non-resident speculation tax that applies to certain foreign buyers of Ontario homes. The province has increased the tax to 20% (from 15%) of the purchase price for the transferred property, as of 30 March 2022.

The tax also now applies to all residential properties across Ontario that are purchased by foreign nationals, foreign corporations, and taxable trustees. Previously, the tax only applied to homes acquired in the Greater Golden Horseshoe Area, which includes Toronto and other heavily populated regions in Southern Ontario.

The province has also announced that it is eliminating rebates of the tax for international students and foreign nationals working in Ontario, and released transitional rules for the tax changes.

Background

Ontario's non-resident speculation tax is payable where a foreign national, foreign corporation, or a taxable trustee (i.e., a trustee of a trust with either a foreign trustee or a foreign beneficiary) purchases or acquires designated land in Ontario. The tax is now 20% of the value of the consideration for the designated land. Designated land is generally land that contains at least one and not more than six single family residences.

The tax does not apply to a trustee of the following types of trusts:

  • A mutual fund trust
  • A real estate investment trust (REIT)
  • A specified investment flow-through trust (SIFT trust)

Ontario also exempts the following individuals from the tax if certain conditions are met:

  • Protected persons under the Immigration and Refugee Protection Act (Canada)
  • Nominees under the Ontario Immigrant Nominee Program
  • Purchasers who jointly acquire the designated land with a spouse who is a Canadian citizen, permanent resident of Canada, protected person or nominee.

Rebates of the tax are still available for foreign nationals who become permanent residents of Canada within four years of purchasing or acquiring their home, where certain conditions are met. Previously, the rebates of the tax were also available for certain foreign nationals working in Ontario for a continuous period of at least one year and international students enrolled in an approved institution for at least two years from the date of purchase or acquisition. Ontario has provided transitional rules for these former rebates.

Read an April 2022 report prepared by the KPMG member firm in Canada

 

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