Non-Resident Speculation Tax

February 22, 2018 Published by

Overview of the Non-Resident Speculation Tax

Effective April 21, 2017, the Government of Ontario introduced the Non-Resident Speculation Tax (the “NRST”). The NRST is a 15% tax on the value of consideration paid to purchase or acquire an interest in residential property located in the Greater Golden Horseshoe Region (the “GGHR”) by any of the following:

  • individuals who are not citizens or permanent residents of Canada,
  • foreign entities, and
  • taxable trustees.

The NRST is in addition to any other land transfer tax that would be assessed by the Province of Ontario and the City of Toronto and applies to transfers of land that contain one to six single family residences such as detached homes, semi-detached homes, condo units, duplexes, triplexes, etc. Transfers of land containing multi-family rental apartment buildings with more than six units, along with agricultural, commercial or industrial lands are exempt from the NRST.

The GGHR consists of the following regions and municipalities:

  • City of Barrie,
  • County of Brant,
  • City of Brantford,
  • County of Dufferin,
  • Regional Municipality of Durham,
  • City of Guelph,
  • Haldimand County,
  • Regional Municipality of Halton,
  • City of Hamilton,
  • City of Kawartha Lakes,
  • Regional Municipality of Niagara,
  • County of Northumberland,
  • City of Orillia,
  • Regional Municipality of Peel,
  • City of Peterborough,
  • County of Peterborough,
  • County of Simcoe,
  • City of Toronto,
  • Regional Municipality of Waterloo,
  • County of Wellington, and
  • Regional Municipality of York.

Individuals and Entities Subject to the NRST

The following individuals and entities are subject to the NRST:

Foreign Nationals[1]

A foreign national is an individual who is not a Canadian citizen or an individual that has not received permanent resident status under the Immigration and Refugee Protection Act (Canada) (the “IRPA”). An individual that obtained permanent resident status but had it subsequently revoked would also be a foreign national for purposes of the NRST.

Foreign Corporations[2]

A foreign corporation is a corporation that either:

  • was not incorporated in Canada, or
  • incorporated in Canada but is controlled by:
    • a foreign national,
    • a corporation not incorporated in Canada, or
    • a combination of foreign nationals and/or corporations not incorporated in Canada. For example, a private company incorporated in Ontario that is owned 20% by a citizen and resident of France and 35% by a US private equity firm would be considered a foreign corporation for NRST purposes.

However, a corporation incorporated in Canada that is listed on a Canadian stock exchange is not subject to the NRST, irrespective of its foreign ownership.

Taxable Trustees

For NRST purposes, a taxable trustee is:

  • a trust where one or more of the trustees are foreign entities, or
  • a trust where one or more of the beneficiaries are foreign entities.

However, the following types of trusts are exempt from the NRST:

  • mutual fund trusts,
  • real estate investment trusts (“REITs”), and
  • specified investment flow-through trusts (“SIFTs”).

Each of the three types of exempt trusts are specified purpose vehicles with specialized criteria required to qualify as one. Therefore, the vast majority will not qualify as one of the exempted trusts. Therefore, even a trust resident in Canada should be careful when acquiring residential real estate and double-check whether it is subject to the NRST.

NRST Exemptions for Individuals

The following individuals may be exempt from the NRST despite not being Canadian citizens or having yet to obtain permanent resident status:

Ontario Immigrant Nominee

A foreign national, who at the time residential property is acquired in Ontario, has been nominated under the Ontario Immigrant Nominee Program (a “Nominee”) and has applied, or certifies that they will apply, for permanent residence status.

Protected Persons

A foreign national, who at the time residential property is acquired in Ontario, has had refugee protection conferred on them under the IRPA.


Where a foreign national jointly purchases residential real estate in Ontario with their spouse and the spouse is either a Canadian citizen, permanent resident, Nominee or Protected Person at the time of the purchase, it should be exempt from the NRST.

For NRST purposes, a spouse is defined as:

  • an individual to whom the foreign national is married,
  • an unmarried individual with whom the foreign national has cohabitated for at least three year, or
  • an unmarried individual with whom the foreign national is currently in a relationship and are the parents of a child (including a child that has been adopted).

The spousal exemption will not apply in any of the following situations where:

  • the property acquired is used for purposes other than being occupied as the foreign national’s (and spouse if applicable) principal residence (i.e.: used as a rental property), or
  • a third-party to whom the NRST would otherwise apply is involved in the purchase. For example, if a Canadian citizen is married to an immigrant from Ireland, and they jointly purchase a home in Richmond Hill, the purchase should be exempt from the NRST. However, if the Irish spouse’s parents contribute funds to help acquire the home because they intend on moving to Canada for their retirement, the entire value of the purchased home would be subject to the NRST.


As with most legislation dealing with taxes, the wording of the NRST can be convoluted and difficult to understand where each rule has an exemption, which has its own exemption, etc. In fact, there are even rebates available to some foreign entities that are subject to the NRST, such as when a foreign national becomes a permanent resident of Canada within four years of acquiring a property subject to the NRST. On the other hand, family trusts could inadvertently fall into the NRST rules where one of the beneficiaries emigrates from Canada and subsequently, the family trust purchases a cottage in Ontario for the family’s enjoyment.

If you are looking to acquire residential real estate in Ontario and are unsure as to whether your purchase will be subject to the new NRST, please contact the experienced accountants at Hogg, Shain & Scheck Professional Corporation. We would be happy to assist you with this or any other tax accounting matters.

[1] In the NRST legislation, foreign nationals and foreign corporations are collectively referred to as foreign entities.

[2] Ibid.