Overview

The NRST is a 15 per cent tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region (GGH) by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.

The NRST applies in addition to the general LTT in Ontario.

The GGH includes the following geographic areas:

Refer to the map and the FAQs at the end of this page for more information.

Effective date

The NRST took effect April 21, 2017.

Binding agreements of purchase and sale signed on or before April 20, 2017, and not assigned to another person after April 20, 2017, are not subject to the NRST.

Entities subject to the NRST

The NRST applies to foreign entities or taxable trustees who purchase or acquire residential property in the GGH.

foreign entity is either a foreign corporation or a foreign national.

foreign corporation is a corporation that is one of the following:

  1. A corporation that is not incorporated in Canada.
  2. A corporation, the shares of which are not listed on a stock exchange in Canada, that is incorporated in Canada and is controlled, directly or indirectly in any manner whatever, within the meaning of section 256 of the Income Tax Act (Canada), by one or more of the following:
    1. a foreign national
    2. a corporation that is not incorporated in Canada
    3. a corporation that would, if each share of the corporation's capital stock that is owned by a foreign national or by a corporation described in paragraph 1 were owned by a particular person, be controlled, directly or indirectly in any manner whatsoever, within the meaning of section 256 of the Income Tax Act (Canada), by the particular person.

foreign national, as defined in the Immigration and Refugee Protection Act (Canada), is an individual who is not a Canadian citizen or permanent resident of Canada.

permanent resident means a person who has acquired permanent resident status and has not subsequently lost that status under section 46 of the Immigration and Refugee Protection Act (Canada).

taxable trustee means a trustee of:

Taxable trustee does not include a trustee acting for the following types of trusts:

  1. A mutual fund trust within the meaning of subsection 132 (6) of the Income Tax Act (Canada).
  2. A real estate investment trust as defined in subsection 122.1 (1) of the Income Tax Act (Canada).
  3. A SIFT trust as defined in subsection 122.1 (1) of the Income Tax Act (Canada).

Types of property subject to the NRST

The NRST applies to the transfer of land which contains at least one and not more than six single family residences.  Examples of land containing one single family residence include land containing a detached house, a semi-detached house, a townhouse or a condominium unit.  In a situation involving the purchase of multiple condominium units, each unit would be considered land containing one single family residence.  Examples of land containing more than one single family residence that are subject to the tax include land containing duplexes, triplexes, fourplexes, fiveplexes and sixplexes. 

The NRST does not apply to other types of land such as land containing multi-residential rental apartment buildings with more than six units, agricultural land, commercial land or industrial land.

The NRST applies on the value of the consideration for the residential property. If the land transferred includes both residential property and another type of property, the NRST applies on the portion of the value of the consideration attributable to the residential property. For example, if the purchase price of the transaction is $1,000,000 and contains one single family residence with a value of the consideration of $400,000, and commercial land with a value of the consideration of $600,000, the 15 per cent NRST would apply to only the $400,000 portion.

General application

The 15 per cent NRST applies to the value of the consideration for a transfer of residential property if any one of the transferees is a foreign entity or taxable trustee.

For example, if a transfer of residential property is made to four transferees, one of whom is a foreign entity that acquires a 25 per cent share in the land, the NRST would apply to 100 per cent of the value of the consideration for the transfer.

Each transferee is jointly and severally liable for any NRST payable. If a foreign entity or taxable trustee does not pay the NRST, the other transferees will be required to pay the tax. This applies even if the other transferees are Canadian citizens or permanent residents of Canada.

The NRST does not apply when a person purchases or acquires residential property as a trustee of a mutual fund trust, real estate investment trust or specified investment flow-through trust.

The NRST applies to unregistered dispositions of a beneficial interest in residential property. This includes purchases and acquisitions of residential property where section 3 of the Land Transfer Tax Act is applicable.

Exemptions

An exemption from the NRST may be available in the following situations:

To qualify for an exemption, the foreign national (and if applicable their spouse) must certify they will occupy the property as their principal residence.

The exemption applies if the Canadian citizen, permanent resident of Canada, nominee or protected person and his or her foreign national spouse purchased the property with other individuals who are Canadian citizens, permanent residents of Canada, nominees, or protected persons.

For the spousal exemption, multiple spousal units may also hold title, so long as one spouse is a Canadian citizen, permanent resident of Canada, nominee or protected person.

All transferees in the conveyance must also certify that they will occupy the property as their principal residence.

However, the exemption does not apply if the Canadian citizen, permanent resident of Canada, nominee, or protected person and his or her foreign national spouse purchased the property with another foreign national who is not a nominee or protected person. For example, if three parties purchase a property as follows:

the exemption would not apply and NRST would be payable.

Exemptions in the Act and its regulations that apply to LTT will also apply to the NRST. The deferral and cancellation of LTT for intercorporate transfers between affiliated corporations will also apply to the NRST.

Rebates

A rebate of the NRST may be available in the following situations:

To qualify for a rebate, the foreign national must exclusively hold the property, or hold the property exclusively with his or her spouse. The property must also have been occupied as the foreign national's (and if applicable his or her spouse's) principal residence for the duration of the period that begins within 60 days after the date of the purchase or acquisition.

Rebates must be applied for within four years after the day on which the NRST became payable, except for the rebate for a foreign national who becomes a permanent resident of Canada. The rebate for a foreign national who becomes a permanent resident of Canada must be applied for within 90 days of the foreign national becoming a permanent resident, and no application may be made more than four years and 90 days from the date the NRST became payable.

All rebate applications must be made using the Ontario Land Transfer Tax Refund/Rebate form for NRST.

Supporting documentation will be required to substantiate all applications for rebates.

Overpayment of NRST

If NRST has been improperly paid or overpaid, a refund may be applied for using the Ontario Land Transfer Tax Refund/Rebate form for NRST.

Supporting documentation will be required to substantiate all applications for refunds.

Tax avoidance and offences

All transfers of land in Ontario are subject to audit.

Anti-avoidance provisions will be enforced to ensure the NRST is reported and paid as required. This includes examining circumstances where Canadian citizens or permanent residents of Canada, as taxable trustees, hold property in trust for a foreign entity. This also includes preventing the use of multiple conveyances to avoid the NRST.

Failure to pay the NRST as required may result in a penalty, fine and/or imprisonment.

Interest

NRST interest is compounded daily and interest rates are reset every 3 months.

Current interest rates (October 1, 2019 to December 31, 2019):

Interest begins to accrue 40 business days after a complete NRST rebate or refund application is received by the Ministry of Finance to the date the rebate or refund is paid.

Note: Interest on a refund as a result of a successful objection or appeal from an assessment of the NRST will be consistent with the general LTT refunds.

For more information, refer to Ontario Regulation 182/17: Tax Payable Under Subsection 2(2.1) of the Act by Foreign Entities and Taxable Trustees, and Ontario Regulation 398/96: Interest on Tax Refunds made under the Land Transfer Tax Act.

Statements regarding NRST at registration

The Ministry of Finance requires an express statement of whether or not a registration is subject to NRST.

Electronic registration (Teraview) – NRST is payable

Effective December 16, 2017, if NRST is payable, statement 9170 must be selected, along with either statement 9171 or statement 9172. The NRST statements are found on the Explanations Tab.

Electronic registration – NRST is not payable

Effective December 16, 2017, if a registration is not subject to NRST, statement 9173 must be selected, along with one of statements 9174 through 9181.

If a transferee wants to provide more than one reason as to why NRST is not payable on registration, the transferee may use 9181 and insert the applicable paragraphs, for example:

Paper registration

Effective December 16, 2017, the Ministry of Finance requires an express statement of whether or not the registration is subject to NRST. The Land Transfer Tax Affidavit has been amended to accommodate the appropriate statements at paragraph 5. If NRST is payable, paragraph 5(a) must be completed. If NRST is not payable, paragraph 5(b) must be completed.

Unregistered dispositions

The Ministry of Finance requires an express statement of whether or not the disposition is subject to NRST. The Return on the Acquisition of a Beneficial Interest in Land form has been amended to accommodate the appropriate statements at section 10. If NRST is payable, section 10(a) must be completed. If NRST is not payable, section 10(b) must be completed.

Payment of NRST

Electronic registrations

After December 29, 2017, Teraview will accept payments of NRST at the time of registration.

Until December 29, 2017, affected purchasers/transferees must pre-pay both the LTT and the NRST directly to the Ministry of Finance (MOF). Once the MOF accepts the pre-payment of the taxes, the transfer may be registered electronically without further payment of LTT or NRST.

The MOF will provide a letter confirming receipt of NRST and LTT with a receipt number.

The MOF will not accept payment of the City of Toronto's municipal land transfer tax. Please contact the City of Toronto about payment of its municipal land transfer tax.

Registrations made at Land Registry Offices (registration on paper)

Land Registry Offices will not accept payment of NRST. For registrations made at a Land Registry Office, if the transfer is subject to NRST, both the LTT and NRST must be pre-paid directly to the MOF.

The MOF will provide a letter confirming receipt of NRST and LTT with a receipt number.

Dispositions / unregistered transfers

If a transfer will not be registered on title, a Return on the Acquisition of a Beneficial Interest in Land form, along with the payment of the LTT and the NRST must be submitted to the MOF within 30 days of the transfer of land.  For more information, see Land Transfer Tax and the Treatment of Unregistered Dispositions of a Beneficial Interest in Land.

How to pre-pay the Land Transfer Tax and the NRST to the MOF

After December 29, 2017, the Ministry of Finance will continue to accept payment of NRST in advance of registration. Taxpayers who wish to pay NRST directly to the Ministry must also directly pay the applicable LTT to the Ministry.

Registrants who receive Ministry of Finance pre-approval of NRST liability must still complete the applicable NRST statements along with either statement 9089 or statement 9090:

If the conveyance is subject to NRST, registrants must complete statements 9089, 9170 and [9171 or 9172]. Registrants will receive a receipt number for insertion into statement 9089.

If the conveyance is not subject to NRST, registrants must complete either statement 9089 or 9090 along with 9173 and one of statements 9174 through 9181.

The Ministry of Finance suggests submitting all required documents a minimum of five business days prior to the closing of the deal. Please note that this guideline only applies if the ministry is provided with all required documents (properly completed) and payments at the time of submission. In addition, complex files (such as those involving multiple transfers) may take longer to process. As well, taxpayers submitting documentation by courier or mail are requested to submit the material at least 15 days prior to closing.

The following documentation must be submitted to the MOF:

For transfers to be registered and for unregistered transfers / dispositions:

  1. Cheque for the LTT and the NRST (certified, if not drawn on the solicitor's trust account), made payable to the “Minister of Finance”
  2. Copy of the Agreement of Purchase and Sale, with all schedules attached
  3. Copy of the draft Statement of Adjustments (if applicable)
  4. If the value of the consideration is based on the fair market value of the land, any appraisals or documentation that is evidence of the fair market value of the land
  5. Any additional documents as may be required to determine the value of the consideration

In addition, for transfers to be registered:

  1. Authorizing or Cancelling a Representative form(s), completed by each transferee
  2. Copy of the Document “in preparation” or three copies of the Transfer/Deed if registration is done on paper
  3. If registration is done on paper, two completed Land Transfer Tax Affidavits.

Please submit the required documentation to the following address, either by mail, courier or in person:

Ministry of Finance
Compliance Branch
33 King Street West
Oshawa ON L1H 8H9

Additional information

If you have administrative or technical questions about the NRST, contact:

Ministry of Finance
Land Tax Section
33 King Street West
Oshawa ON L1H 8H9

Map of the Greater Golden Horseshoe Region

Map of the Greater Golden Horseshoe