In late 2016 and early 2017, The City of Toronto and the surrounding areas such as Mississauga experienced an unprecedented growth in housing prices. By the spring of 2017 we were looking at over a 30% increase in prices from the prior year and this was creating a dangerous economic situation. In response to public opinion and as an attempt to cool rising prices, the Government introduced the Non-Resident Speculation Tax, commonly known as the Foreign Home Buyers Tax.

What is the Foreign Home Buyers Tax?

The Non-Resident Speculation Tax 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.

Who Does the Non-Resident Speculation Tax Apply Too?

According the Ontario Ministry of Finance Website the tax applies to Foreign Entities and Taxable Trustees who purchase residential property in the Golden Horse Shoe area, which includes the City or Toronto and suburbs such as Mississauga and Oakville.

According to the Ontario Ministry of Finance, the highlighted areas on the map are subject to the Non-Resident Speculation Tax. See the Ministry of Finance Website for more information on the Resident Speculation Tax

A foreign entity includes foreign nationals, who are not Canadian Citizens or permanent residents. The good news, is that Permanent residents are not affected by this new tax. See the Canadian definitions of a Foreign National and Permanent Resident as found on the Ontario Ministry of Finance Website:

• A 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.
• A 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).

Exemptions to the Non-Resident Speculation Tax

The good news is that in some cases, there are exceptions to the rule. According to the Ontario Ministry of Finance Website, the following people MAY be exempt.

• Nominee – A foreign national who is nominated under the Ontario Immigrant Nominee Program (nominee) at the time of the purchase or acquisition, and the foreign national has applied or certifies that they will apply to become a permanent resident of Canada
• Protected person – A foreign national on whom refugee protection is conferred (protected person) under section 95 of the Immigration and Refugee Protection Act (Canada) at the time of the purchase or acquisition, or
• Spouse – A foreign national who jointly purchases residential property with a spouse, who is a Canadian citizen, permanent resident of Canada, nominee or protected person.

It’s important that before purchasing a home, that you do your research and get legal advice on the matter. This article is for information purposes only and is not an official policy. The author of this post is not an expert in, or qualified to give any advice what so ever on a person’s residency status or their status under the Non-Resident Speculation Tax.

For more information go to:

https://www.fin.gov.on.ca/en/bulletins/nrst/