What Ontario's New Foreign Speculation Tax Means.
Saturday Apr 29th, 2017
The Non-Resident Foreign Investor Tax legislation still needs passing, but here's the overview.
The Non-Resident Speculation Tax (NRST) is 15% on the purchase or acquisition of an interest in a Residential (only) property in the Greater Golden Horseshoe by individauls who aren't Canadian citizens or permanent Canadian residents or foreign corporations and taxable trustees. This NRST tax is in addition to the Ontario Land Transfer Tax. The legislation, once passed, is retroactive to April 21, 2017. Binding agreements of Purchase & Sale signed prior to April 21, 2017 are exempt from the NRST.
This tax includes the purchase of single family residences, detached, semi-detached, townhouses and condominium units, duplexes, triplexes, fiveplexes and sixplexes. It does not pertain to multi-residential rental apartment buildings with over 6 units, agricultural, commerical or industrial land.
Even if only one of the Buyers or Transferees is a Foreign entity, the NRST payable applies to 100% of the value of the consideraiton for the purchase or transfer.
The NRST doesn't apply when a person purchases or acquires a residential property as a 'Trustee' of a mutual fund trust, real estate investment trust or specified investment flow-through trust.
The NRST can be exempt to a foreign national who receives confirmation under the Ontario Immigrant Nominee Program, as long as they are confirmed under the program at the time of the purchase or acquisition. It can also be exempt for those who are conferred with the status of "Convention Refugee" or "Person In Need Of Protection" (Refugee). Another exemption can be if a foreign national has a spouse who is a Canadian citizen, permanent Canadian resident or a 'nominee' or 'refugee'. However the exemption doesn't apply if there are more than the foreign national and the spouse on title.
REBATE OF THE NRST TAX
A Rebate can occur if:
- within 4 years of the date of purchase/acquisition the foreign national becomes a Canadian citizen or permanent Canadian resident or
- the foreign national is a full time student for at least the last 2 years from the date of purchase/acquisition in an 'approved institution' as per the Ministry of training, Colleges and Universities or
- the foreign national has legally worked full time in Ontario continuously for 1 year since the date of purchase/acquisition.
To be eligible the foreign national must hold property ONLY with his/her spouse and be used as their principal residennce for the time period.
To ready more please visit: http://www.fin.gov.on.ca/en/builletins/nrst/nrst.html