Introduction
Permanent residents
Foreign workers and international students
Comment


Introduction

The Province of Ontario has announced that it is increasing the non-resident homebuyer tax, also known as the "non-resident speculation tax" (NRST) from 15% to 20% province-wide.

According to Finance Minister Peter Bethlenfalvy, the increase is part of the Ontario government's efforts to "increase supply and help keep costs low for Ontario families and homebuyers, not foreign speculators looking to turn a quick profit".

Since the NRST's introduction in 2017, foreign nationals who purchased homes were subject to an additional tax rate of 15%. The tax only applied to those in the Greater Golden Horseshoe (GGH) region in southern Ontario, which includes the Greater Toronto Area and surrounding areas such as:

  • Barrie;
  • Guelph;
  • Hamilton;
  • Niagara;
  • Peterborough; and
  • Waterloo.

However, as of 30 March 2022, the NRST has increased to 20% and encompasses Ontario.

The Ontario government is also aiming to close loopholes in the rebates available to foreign nationals. However, there are still some tools available to permanent residents, workers and students who are looking to own property in Ontario.

Permanent residents

Rebates and other exemptions for new permanent residents of Canada will continue to be available. For example, those in the Ontario Immigrant Nominee Program (OINP) may be exempt from the NRST if they:

  • are nominated under the OINP at the time of the purchase or acquisition; and
  • applied or certify that they will apply to become a permanent resident of Canada before the expiration of their nominee certificate.

The Ontario Immigrant Nominee Program (OINP) is the province's economic immigration program. The OINP, which works with Immigration, Refugees and Citizenship Canada, recognises and nominates people who have the skills and experience that the Ontario economy needs for permanent residence. The Canadian government gives final approval to applications for permanent residence.

Similarly, foreign nationals who purchased a home after 29 March 2022 may apply for a rebate if they paid for the NRST and:

  • become a permanent resident of Canada within four years from the date of the purchase or acquisition of their home;
  • hold the property alone or with their spouse only; and
  • occupy the property, along with their spouse (if applicable), as their principal residence for the period that begins within 60 days after the date of purchase and ends when they make an application for the rebate or the rebate conditions have been met, whichever is later.

Applications for the rebate must be received by the ministry within 90 days of becoming a permanent resident of Canada. Note that the issuance of a permanent residence card does not trigger permanent residence in Canada. Rather, it is the date that an immigration officer signs and dates the confirmation of permanent residence document.

When an individual is approved for permanent residence in Canada, they receive a confirmation of permanent residence document. An immigration officer at the port of entry or a Citizenship and Immigration Canada office signs and dates this document when permanent residence is finally granted.

Foreign workers and international students

Previously, foreign nationals who worked full-time in Ontario pursuant to a valid work permit for at least one year from the date of acquiring a home were eligible for an NRST rebate. This rebate will no longer be available.

In addition, foreign national students enrolled in full-time studies for at least two years after the purchase of a home will no longer be eligible for rebates that were previously available.

However, the Ontario government introduced transitional rebates for foreign workers or students who purchased a home in the GGH. If a foreign worker or student purchased a home within the GGH region and if a binding agreement was signed on or before 29 March 2022 and not assigned to others after this date, then the buyer may still qualify for the previous international student NRST rebate or the foreign national working in Ontario rebate.

Comment

This change will have significant implications for all foreign nationals looking to establish themselves in Canada. It is, therefore, imperative that these individuals consult experienced experts prior to entering the market. With expert financial advice, foreign nationals may be able to save tens of thousands of dollars on the purchase of their home.

For further information on this topic please contact Zohra Jaffer, Steven Raphael, Graeme Black or Aamir Talati at KPMG Law by telephone (+1 416 777 8000‚Äč) or email ([email protected], [email protected], [email protected] or [email protected]). The KPMG Law website can be accessed at www.kpmg.com.
Amira Zubairi, associate at KPMG Law, assisted in the preparation of this article.