New Rules in Effect

By: Diana Budway

New Rules in Effect

Tags: Tax, Ontario, Property

Effective April 21, 2017, a 15% tax is imposed on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) or taxable trustees. (Some exceptions apply, refer to Ontario Ministry of Finance website.) This new tax is in addition to Ontario's current Land Transfer Tax. The implementation of the Non-Resident Speculation Tax (NRST) is subject to the approval of the Legislature.

Another new Rule that has come into effect on April 24th, 2017 for homebuyers in Ontario is that they will now have to provide more information about their citizenship and place of residence when they buy real estate anywhere in the province. The changes were first announced in the news in last fall’s economic statement.

Binding Agreements of Purchase and Sale signed on or before April 20th, 2017 are not subject to the NRST.

Now anyone who buys a piece of land in the province that has one to six single-family homes, or agricultural land, must fill out the Prescribed Information for Purposes of Section 5.0.1 Form. This form will be incorporated with documents that govern the payment of land-transfer taxes, which is a tax the everyone must pay in the province of Ontario when property changes hands. (Qualified first-time home buyers can receive a rebate of up to $4,000. Which would be equivalent to the Land Transfer Tax payable on a property purchased at $368,000.)

The prescribed information required includes (but is not limited to) the following:

· 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

· the type of dwelling (detached, semi-detached, condominiums, cottages, etc.)

· 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, and

· information about beneficial owners, if the person who purchases or acquires the land is acting as a trustee, nominee or in a similar capacity.

To assist taxpayers, the Ministry of Finance will provide a transition period from April 24 to May 5, 2017, where any deficiencies relating to the Form will not incur penalties. Note: The additional information is still required to be submitted for applicable purchases and acquisitions of land that occur during this transition period.

The purpose of the form will be one of the newest tools to tackle the province’s ongoing housing affordability crises. “To support evidence-based policy development with respect to Ontario’s real estate market”, is how the government explains the purpose of the new rule.

For questions or assistance contact: Ministry of Finance, Toll-free: 1-866-ONT-TAXS (1-866-668-8297) Ministry website: