What is the Non-Resident Speculation Tax?
The Non-Resident Speculation Tax (NRST) is a tax on the purchase or acquisition of an interest in land by individuals who are not Canadian citizens or permanent residents. The tax applies to residential properties, including vacation homes and investment properties. The NRST came into effect on April 20, 2017.
The Changes
Previously, the NRST was 15% of the value of the property. The tax has now been increased to 20% and expanded to apply provincewide. This means that if you are not a Canadian citizen or permanent resident and you purchase a property in any of these areas, you will be subject to the NRST.
What does this mean for you?
If you are a non-resident of Canada and you are thinking of purchasing property in Ontario, it is important that you consult with a real estate lawyer to ensure that you understand your obligations under the NRST.
Exemptions
The NRST is not applicable if you are a Canadian citizen or permanent resident. There are also a few other exemptions, including:
(1) Protected Person: You may be exempt from the NRST if you have been granted protected person status under s. 95 of the Immigration and Refugee Protection Act
(2) Spousal Exemption: You may be exempt from the NRST if you are a spouse of a Canadian citizen, Permanent resident or a protected person.
(3) Nominee Exemption: You may be exempt from the NRST if you have been nominated under the Province of Ontario through its Ontario Immigrant Nominee Program.
If you think you may be exempt from the NRST, it is important that you consult with an accountant to determine if you meet the requirements for an exemption.
The Consequences of Not Paying the NRST
The NRST is paid through Teraview, Ontario’s electronic land registration system, at the time of registration.
If you purchase a property without paying the NRST, you will be required to pay the tax plus interest and penalties. In addition, you may be subject to enforcement action by the Ministry of Finance, which could include seizure of the property.
