On April 20, 2017, the Ontario government announced that it is imposing a 15 per cent non-resident speculation tax (NRST) on the purchase or acquisition of interests in residential property located in the Greater Golden Horseshoe (GGH). The GGH incorporates the greater Toronto area, including Toronto itself as well as Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Waterloo, Wellington and York. The tax will be effective as of April 21, 2017, but will not apply to binding agreements of purchase and sale signed on or before April 20, 2017. The announcement was included as part of the 16-point proposal introduced in the Ontario government’s Fair Housing Plan, which aims to bring stability to Ontario’s real estate market.

Legislation implementing the NRST has not yet been released. The information relating to the NRST in this Blakes Bulletin is based on a bulletin released by the Ontario Ministry of Finance (Ministry) on April 20, 2017. However, it is possible that the implementing legislation may differ from the rules as described below.


The NRST applies to the value of the consideration for a transfer, including a beneficial transfer, of residential property in the GGH if any of the transferees is a “foreign entity” or a “taxable trustee”. Residential property subject to the NRST is land that contains at least one and not more than six family residences, as further discussed below under “Types of Property Subject to the NRST”.

As mentioned above, binding agreements of purchase and sale signed on or before April 20, 2017 will not be subject to the NRST. However, agreements of purchase and sale that are still conditional (for example, conditional on financing or satisfactory due diligence) may not be considered “binding” and consequently, a transfer pursuant to such agreements could be subject to the NRST. No guidance has yet been provided on this point.


The NRST is payable in respect of transfers to “foreign entities” and “taxable trustees”. Foreign entities are foreign nationals and foreign corporations. A foreign national is an individual who is not a citizen or permanent resident of Canada. A foreign corporation is:

  1. A corporation that was not incorporated in Canada
  2. A Canadian corporation whose shares are not listed on a Canadian stock exchange and that is controlled in whole or in part by a foreign entity
  3. A corporation that is controlled directly or indirectly by a foreign entity for the purposes of section 256 of the Income Tax Act (Canada) (Act)

A taxable trustee is a trustee which is either itself a foreign entity, or which holds title in trust for foreign entity beneficiaries. The NRST does not apply to a trustee of a mutual fund trust, real estate investment trust or specified investment flow-through trust. There is notably no exemption provided for a trustee of a pension fund and consequently, it appears that Canadian pension funds with foreign national beneficiaries may be subject to the NRST if they are structured as trusts and acquire land that is otherwise subject to the tax.

If there are multiple purchasers, the NRST will be payable on 100 per cent of the value of the whole property if any one of the transferees is a foreign national, foreign corporation or taxable trustee. In addition, each transferee (whether or not a foreign entity or trustee) is jointly and severally liable for any NRST payable.

Notably, the NRST may be payable by Canadian corporations if they are controlled, in whole or in part, by a foreign entity. There is uncertainty regarding the “foreign control” requirement for foreign corporations. In particular, no guidance has been provided concerning the meaning of “controlled in whole or in part”, or concerning the difference, if any, between corporations controlled “in whole or in part” by a foreign entity and corporations controlled “directly or indirectly by a foreign entity”. Furthermore, it is uncertain whether the carve-out provided to Canadian corporations whose shares are listed on a Canadian stock exchange will be applicable to a corporation that is controlled “directly or indirectly” by a foreign entity for the purposes of section 256 of the Act.

Additional uncertainty arises from the fact that section 256 of the Act incorporates an extended meaning of control, using the expression “controlled, directly or indirectly in any manner whatever” to include de facto control in addition to de jure control (having sufficient votes to elect a majority of the board of directors). However, the phrase “controlled directly or indirectly” (without the reference to “in any manner whatever”), which appears in the NRST proposals, is not used in section 256 of the Act, and it is unclear whether the extended meaning of control in section 256 of the Act is meant to be included in the context of the NRST. Hopefully the legislation will provide some clarity on these issues.

Canadian corporations will need to be careful to ensure that they are not inadvertently considered a foreign corporation due to uncertainty surrounding the meaning of “control”.


The NRST will apply to a transfer of land that contains at least one and not more than six family residences. Where multiple condominium units are purchased, each unit would be considered land containing one single family residence. However the NRST will not apply to purchases of multi-residential rental apartment buildings with more than six units. Agricultural land, commercial land and industrial land are not subject to the NRST.

Where land contains both a family residence and another type of property, the NRST will apply only to the portion of the consideration that is attributable to the family residence.

It appears, based on such details of the proposals as are available at this time, that it will likely be the character of the property at the time of purchase that will determine whether it is subject to the NRST. For example, where residential property that is subject to the NRST is purchased by a foreign corporation, foreign national or taxable trustee with the intention of re-zoning the property into commercial or industrial land, it appears that the NRST may still apply. In addition, it seems that residential property will retain its character regardless of whether it is purchased as an investment.


Reporting and payment of the NRST will be processed through Ontario’s electronic registration system (operated by Teranet), which is the system currently used for reporting under Ontario’s Land Transfer Tax Act. A statement that either NRST does not apply or that NRST applies and has been paid to the Ontario Ministry of Finance, together with a receipt confirmation number for the payment, will need to be included in the Land Transfer Tax Affidavit currently required under the Land Transfer Tax Act. Taxpayers reporting unregistered dispositions of land will need to include a similar statement in a covering letter.

Teranet is not yet able to collect the NRST, and so for an interim period, any NRST payable must be paid directly to the Ontario Ministry of Finance. Notably, it seems that payment of the NRST for relevant transfers of residential property is required as of April 21, 2017, before the legislation has been drafted or passed.

The implementing legislation is expected to include anti-avoidance provisions (as well as certain rebates or exemptions in specific circumstances, for instance involving refugees) and certain transitional provisions, but no guidance on these provisions has yet been provided.


In addition to announcing the implementation of the NRST, the Ontario government also announced that it will review real estate agent practices such as “double ending” (the representation by a single agent of both the buyer and seller in the same transaction) as well as practices that may be contributing to tax avoidance and excessive speculation in the housing market, such as “paper flipping”. The government further announced that it will partner with the Canada Revenue Agency to explore more comprehensive reporting requirements to ensure that correct federal and provincial taxes are paid.

Effective as of April 24, 2017, additional disclosure will generally be required of persons who purchase or acquire at least one and not more than six single family residences, and persons who purchase or acquire agricultural land. The information required to be disclosed includes:

  • Whether the home is intended to be occupied by the person who purchases or acquires the land, or their family member(s), as their principal residence
  • Whether the property, in part or in whole, is intended to be leased out
  • Residency, citizenship and permanent resident status, if the person who purchases or acquires the land is an individual
  • Information about incorporation, ownership and control, if the purchasers are corporations
  • Information about beneficial owners, if the person who purchases or acquires the land is acting as a trustee, nominee or in a similar capacity

Additional measures proposed in the Fair Housing Plan include:

  • The introduction of legislation that would, if passed, empower municipalities such as the City of Toronto to introduce a vacant homes property tax
  • The introduction of a C$125-million, five-year program to encourage the construction of new rental apartment buildings by rebating a portion of the development charges
  • Expanding rent control to all private rental units in Ontario, including those built after 1991 (rental cost increases would only be permitted in accordance with the rate posted in an annual provincial rent increase guideline)