What is Ontario’s Non-Resident Speculation Tax Rebate and How to Receive It
If you’re in the process of researching information before buying property, you may have heard the phrase Non-Resident Speculation Tax (NRST) stated on websites or documents. For most towns in Ontario, NRST is inapplicable, however, if you live or plan to live near/ in the Golden Horseshoe area, it is important to understand the relevance of the NRST to your real estate requirements and whether or not you are eligible for a rebate.
What is Ontario’s Non-Resident Speculation Tax?
To coincide with a housing crisis that was occurring in the Greater Toronto Area, the Land Transfer Tax Act (LTTA) was amended in 2017 to add a 15% tax to certain residential conveyances in the area in hopes that it would help advert foreign parties from investing in the area and hopefully lower the price of housing. The NRST is applicable to any foreign entity or taxable trustee who enters into purchasing a residential property that contains “one but not more than six residential properties” on or after April 1, 2017, who is not a Canadian citizen or a Permanent Resident of Canada.
NRST is paid on or before the closing of the conveyance and is usually calculated through Teraview (the Ontario government’s online land registry) and paid directly to the lawyer as part of your funds to close, including the Land Transfer Tax.
Municipalities within the Greater Horseshoe area that are affected by NRST include:
- 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
What is the NRST Rebate?
Usually, if you are immediately eligible for a rebate on any taxes on your conveyance, the deed will be registered on Teraview to reflect this, and you will not have to include the amount in your funds due at closing. However, mistakes happen and there are instances when a title is registered without the proper boxes checked, and you or your lawyer automatically pays the tax. To have a previously paid NRST refunded or if you meet any of the below criteria and want to apply for a rebate within the allowed time period, you must fill out a form 9996E, Ontario Land Transfer Tax Refund/Rebate Affidavit and send it to the Ministry of Finance Ontario.
If your lawyer or another agent is doing it on your behalf, you will also be required to sign an Authorization of Representation form.
According to Section 5-7 of O. Reg 182/17 of the Land Transfer Tax Act, you can claim the NRST Rebate if:
- Only the transferee (purchaser) and/or the transferee’s spouse are the only registered owners of the property and they occupied the property within 60 days;
AND - The transferee or the transferee’s spouse becomes a Permanent Resident of Canada within 4 years after the date of the conveyance and the application to have the tax rebate is done within 91 days after becoming a Permanent Resident of Canada. This means that no application can be filed at all after 4 years and 91 days;
OR - The transferee or their spouse was enrolled full-time in an eligible post-secondary institution for at least 2 years;
OR - The transferee has been working full-time with a valid work permit for a period of 1 year.
If there are 2 registered transferees and only 1 becomes a Permanent Resident of Canada within the 4 years, you are only eligible for a 50% rebate. Thusly, you are also able to apply for the remaining 50% rebate if only one spouse was a Permanent Canadian Resident on the day of conveyance and the other becomes a Resident within the allotted time period of 4 years plus 91 days.
What is the Processing Time?
The processing time required before you receive your rebate can depend on various factors. The Ministry of Finance receives many applications for various rebates and refunds to complete along with their other busy workload every day. Also, whether or not you request a direct deposit as part of your application or expect a cheque in the mail can also affect the amount of time you will need to wait. If you are only registered for direct deposit with Service Canada, this will not help get the refund/rebate in your bank account quicker as the Ministry of Finance is within the Government of Ontario’s jurisdiction. A response is usually received within a couple of weeks of the Ministry receiving your application. If it was sent by regular mail, that period also impacts the processing time.
It is important to follow all the steps required to receive your rebate as any mistakes can impact the time of processing as well as raise the chances that the application will be returned. This can be problematic if you are requesting the rebate near the end of the allowed 4 year period.
Some reasons the application for a rebate of NRST could fail include:
- An Authorization of Representation was not signed by you if another party is applying on your behalf;
- Your application was not received within the 4 year time period;
- Often, pieces of identification proving the identity as well as the address of the transferees are needed, and if not sent, can be requested later, which will take more time. If the identification does not show the conveyed land as the address of the transferee, the Ministry may require other proof that you occupied the land within 60 days of the closing date.
Why Choose Us?
KeWang Professional Corporation is one of Toronto’s most esteemed General Accountant Professional Services serving clients throughout the GTA from various personal and professional backgrounds. We offer affordable prices in comparison to legal firms and have experience and knowledge when it comes to taxes and the Ministry of Finance. Reach out for a consultation today.