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Important Changes Upcoming to the Non-Resident Speculation Tax (“NRST”)
Kormans LLP
March 31, 2022
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Effective as of April 27, 2017, the Government of Ontario previously introduced the NRST as a sales tax in addition to the existing Harmonized Sales Tax and Land Transfer Tax to be applied against Foreign Entities purchasing certain types of residential real estate in an area defined as the Greater Golden Horseshoe (“GHH”). At the time the NRST was introduced, the concern was that Foreign Entities were often “speculators” using real estate in the GGH as an investment vehicle. As a matter of policy, the Government of Ontario was concerned that this activity was at least partially to blame for sky-rocketing home sale prices across the GGH which made it difficult for Canadian Citizens and Permanent Residents of Canada to buy properties for their own personal use.
As of March 30, 2022, the Government of Ontario is introducing three key changes to the existing NRST structure. This will make it more costly for Foreign Entities to purchase property in Ontario.
First, they are increasing the NRST amount from 15% of the entire purchase price, to 20% of the entire purchase price.
Second, the NRST will now be applicable to certain types of residential real estate across all of Ontario and not just in the GGH.
Finally, previously, there were Rebates that certain foreign students studying in Ontario, and certain foreign workers employed in Ontario under a valid work permit could apply for, in order to get back the NRST they were required to pay on completion of purchasing a home. No longer. These two Rebates will be eliminated with respect to any transactions that are pursuant to agreements of purchase and sale signed on or after March 30, 2022.
These are major changes for the Ontario real estate market to be aware of for consumers, realtors and for lawyers alike. There are also transitional rules being established. This news is breaking, so be sure to stay tuned to www.kormans.ca for more information as it becomes available. We will bring you all the latest information you need to know as the Government of Ontario implements these new amendments!
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