The government is raising the Non-Resident Speculation Tax rate to 20%, addressing loopholes to combat tax avoidance, and expanding the tax to apply provincewide from March 30, 2022, to address Ontario’s housing crisis by prioritizing Ontario families and homebuyers.
The amendments to make the tax the most extensive in Canada were unveiled as the government prepares to disclose the next steps in its housing supply action plan, which aims to increase the number of homes built in Ontario.
The Non-Resident Speculation Tax is now imposed at 15% on residences purchased in the Greater Golden Horseshoe Region by foreign nationals, foreign businesses, and taxable trusts. Increasing the tax rate to 20% and extending the tax to all of Ontario will assist in dissuading non-resident investors from speculating in the housing market while also making homeownership more accessible to citizens.
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The Ontario government is closing loopholes to help Ontarians attempting to buy their first home by limiting NRST relief eligibility to newcomers who intend to stay in the province for the long term.
To ensure that Ontario remains open to new Canadians, rebates for new permanent residents of Canada and related exemptions will be given to eligible newcomers. Foreign nationals studying and working in Ontario who become permanent residents of Canada can apply for a refund.
“Young families, seniors, and employees are all in severe need of suitable homes. “However, a shortage of supply and growing costs have put the goal of homeownership out of reach for far too many families in the province,” said Peter Bethlenfalvy, the province’s finance minister. “That is why our administration has enacted the country’s most comprehensive Non-Resident Speculation Tax.” Our administration is working to boost supply and keep prices low for Ontario families and homebuyers, not for international speculators wanting to make a quick buck.”
Ontario is also collaborating with municipalities to develop a Vacant Home Tax, another measure for increasing the housing supply. The Municipal Act gives municipalities the right to enact such taxes. The City of Toronto has enacted a Vacant Home Tax, and several other cities, including Ottawa, are considering similar legislation. The province will also form a working committee including local officials to enable sharing of information and best practices.
In addition, Ontario will consult on potential steps to address land speculation concerns. For example, Ontario will look into measures to prevent construction delays that could artificially inflate the cost of new homes for Ontario people due to land speculation.
“Our administration is taking steps to make house ownership more accessible to more hardworking Ontario families, and I am excited to share our strategy with you soon,” said Steve Clark, Minister of Municipal Affairs and Housing. “There is no one-size-fits-all solution to the housing dilemma.” Addressing the home supply shortage is a long-term approach requiring long-term commitment and coordination with our partners and across government levels.”
Ontario will continue to collaborate with all levels of government to address the country’s housing supply concerns, based on feedback from the Ontario-Municipal Housing Summit and Rural Housing Roundtable. The province urges the federal government to take more steps to complement Ontario’s approach and combat foreign speculation in the province.
- The Non-Resident Speculation Tax is now a 15% tax on the price of residences purchased in the Greater Golden Horseshoe Region by foreign nationals (those who are not Canadian citizens or permanent residents), foreign businesses, or taxable trustees. The tax will increase to 20% for binding purchase, and sale agreements entered on or after March 30, 2022. It will apply to residences purchased by foreign nationals, corporations, or taxable trustees everywhere in Ontario.
- International students and foreign nationals working in Ontario will no longer be eligible for rebates if they engage in binding purchase and sale agreements on or after March 30, 2022.
- Foreign nationals who become permanent residents of Canada within four years of the tax becoming payable are still eligible for a rebate. If eligibility criteria are met, exemptions are also available for candidates under the Ontario Immigrant Nominee Program, protected persons (refugees), and spouses of individuals not subject to the Non-Resident Speculation Tax.
More information, including transitional restrictions, can be found on the Non-Resident Speculation Tax homepage.