Non-Resident Speculation Tax (NRST)

What is Non-Resident Speculation Tax (NRST)?

The NRST applies on the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are foreign nationals (individuals who are not Canadian citizens or permanent residents of Canada) or by foreign corporations or taxable trustees. Effective October 25, 2022, the NRST rate is 25%.

Who pays NRST
The NRST applies to the value of the consideration for the 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 three transferees, one of whom is a foreign entity that acquires a 33% share in the land, the NRST would apply to 100% of the value of the consideration for the transfer.

As an example, Tomoko, Shoshana, and Lieven buy a home together. Tomoko acquires 33%, Shoshana acquires 33% and Lieven acquires 34% interest, with a value of the consideration of $1,500,000. Tomoko and Shoshana are Canadian citizens, but Lieven is a foreign national. The NRST is applied to the full value of the consideration, resulting in NRST payable of $375,000. They do not pay NRST on just 34% of the value of the consideration. The NRST is not prorated to the interest acquired by the foreign national.

Each transferee is 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, permanent residents of Canada or non-foreign corporations.

Exemptions from the NRST
An exemption from NRST may be available for registered transfers if the transferee is a nominee, a protected person or a spouse of a Canadian citizen, a permanent resident of Canada, a nominee or a protected person. Exemptions in the Act and its regulations that apply to LTT also apply to the NRST.

Supporting documentation may be required by the ministry to substantiate all claims for an NRST exemption.

To learn more, refer to Ontario.ca's page on: Transfers that are exempt from the NRST.

Rebate and refund of the NRST
A rebate of the NRST, may be available for registered transfers if the transferee becomes a permanent resident of Canada. If the land purchased is within the Greater Golden Horseshoe Region of Ontario, and if a binding agreement of purchase and sale was signed on or before March 29, 2022, and not assigned to other persons after March 29, 2022, then a foreign national may qualify for the International Student NRST Rebate or the Foreign National Working in Ontario NRST Rebate.

A refund of the NRST may be available for eligible transferees if the tax has been improperly paid or overpaid.

Supporting documentation will be required to substantiate all applications for a rebate or refund.

To learn more, refer to our NRST rebates and refunds webpage.

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.