Changes to Ontario’s NRST will negatively affect Assignees

The NRST was introduced in the Province of Ontario in 2017 which required foreign national purchasers to pay a 15% speculation tax on the purchase price of residential property acquired in the “Greater Golden Horseshoe” area of Ontario (Toronto and the surrounding area).

The Ontario Ministry of Finance just announced amendments to the Ontario Land Transfer Tax legislation, specifically as it relates to the NRST.  The amendments take effect March 30, 2022. A brief summary of the key changes to the NRST is as follows:

  1. RATE:  NRST has been increased to 20% of the purchase price of residential property purchased by foreign nationals (previously 15%);
  2. LOCATION: NRST applies to the purchase by foreign nationals of residential property in the entire Province of Ontario (previously the NRST applied only to properties acquired in the Greater Golden Horseshoe region of the Province of Ontario); and
  3. REBATES: Rebates on NRST paid are now only available to foreign nationals who become permanent residents of Canada within four (4) years of the purchase closing date, live at the property as their principal residence and apply for the rebate within 90 days of becoming permanent residents of Canada (previously rebates were also available to foreign nationals who worked fulltime in Ontario continuously for one (1) year from the purchase closing date and lived at the property as their principal residence – they were not required to become permanent residents of Canada – this is no longer the case).

Transitional provisions will apply to Agreements of Purchase and Sale entered into on or before March 29, 2022.   

It is very important that HR teams make those on work permits aware of these new measures.  Make sure your RMC’s can demonstrate the ability to speak intelligently about this with transferees.

Many executive transferees want to continue to build equity in a home, especially when they come up from the United States.  They are used to home ownership and want to continue to reap its benefits.  And, in the past, they did not need to worry so much about the NRST because they could apply for a rebate after working for a year.  This latest change will hurt many of these types of transferees.

This policy will do nothing to assist in moderating climbing home sale prices in the GTA, or, of course, the rest of Ontario.  It just creates a deterrent for those who want to come into Canada to contribute to the Canadian economy. These are not real estate speculators.  

With contributions from Moore & Costello.

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