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The New Non-Resident Speculation Tax and Estate Planning and Administration: What You Need to Know

The Ministry of Finance recently introduced a 15% tax on the purchase or acquisition of a residential property in the Greater Golden Horseshoe by individuals who are not citizens or permanent residents of Canada or by foreign corporations or taxable trustees. The new Non-Resident Speculation Tax (“NRST”) is in addition to the Ontario and Toronto land transfer taxes. Although the NRST is subject to the approval of the legislature, it is currently in effect and applies to any agreements of purchase and sale entered into after April 20, 2017.

The NRST is a tax of 15% on the value of the consideration paid for a residential property. A residential property is land that contains at least one and not more than six single family residences, such as detached and semi-detached houses, townhouses and condominium units.

How does the NRST affect Estate Planning and Administration for Canadian Citizens and Permanent Residents?

The NRST is imposed on foreign buyers of a residential property, regardless of whether a property is acquired for real estate speculation. Consequently, the NRST may affect estate planning and administration for Canadian citizens and permanent residents and estates owning Ontario property. The tax may affect individuals who wish to transfer Ontario real property to trusts or private corporations as part of their estate plans, if the corporations or trusts fall within the NRST definitions of “foreign corporation” or “taxable trustee” respectively. The NRST also affects individuals who wish to transfer property to family members who are not Canadian citizens and permanent residents. Note that the NRST is a tax on the value of the consideration paid for a residential property, and therefore is only payable if a transferee or beneficiary is paying for the property.

Who must pay the NRST?

The NRST is payable when a residential property is purchased or acquired by foreign entities or taxable trustees.

For the purposes of the NRST, “foreign entities” are defined as:

  • Individuals who are not citizens or permanent residents of Canada, as defined in the Immigration and Refugee Protection Act (Canada); or
  • Foreign corporations.

For the purposes of the NRST, a “foreign corporation” is a corporation that is one of the following:

  • Not incorporated in Canada;
  • Incorporated in Canada but controlled in whole or in part by a foreign national or other foreign corporation, unless the shares of the corporation are listed on a Canadian stock exchange; or
  • Controlled directly or indirectly by a foreign entity for the purposes of the associated corporation rules in section 256 of the Income Tax Act (Canada).

For the purposes of the NRST, a “taxable trustee” is:

  • A foreign entity holding title in trust for beneficiaries; or
  • A Canadian citizen, permanent resident of Canada, or a corporation holding title in trust for foreign entity beneficiaries.

NRST is payable whether or not a transfer is registered in Ontario’s land registration system. In other words, the NRST applies to unregistered dispositions of a beneficial interest in residential property in Ontario.

The 15% NRST applies to the entire value of the consideration for a transfer of residential property if any one of the transferees is a foreign entity or taxable trustee. In such a case, each transferee, including a transferee who is a Canadian citizen or permanent resident of Canada, is jointly and severally liable for any NRST payable. However, a foreign national is exempt from the NRST when purchasing property with a spouse who is a Canadian citizen, permanent resident of Canada, provided that the spouses do not purchase the property with another foreign entity.

Does the NRST apply to non-resident beneficiaries of an estate where the estate is distributing a property in specie to the beneficiaries?

Like the land transfer tax, the NRST is a tax on the value of the consideration paid for the property. If a beneficiary of an estate is receiving a property as a gift, then no NRST is payable However, if a beneficiary is paying anything in exchange for receiving the property, NRST is payable on the value of the consideration, regardless of when the payment is made. Such consideration may include paying capital gains or other taxes associated with the property, assuming or paying any outstanding mortgages on title, or acquiring the property instead of receiving a share of an estate.

Does the NRST apply to a non-resident executor (or trustee) on a transmission application?

When an executor or estate trustee administers an estate that holds real property, the property must be transferred to an estate trustee so that the estate trustee may either sell the property or convey the property to the beneficiaries of the estate. In Ontario, the property is conveyed to the estate trustee by registering a transmission application. Neither NRST nor land transfer tax are payable when a transmission application is registered, regardless of whether the estate trustee is a “foreign entity” or “taxable trustee”, as no consideration is paid in these transactions.

Does the NRST apply to a non-resident joint owner on a survivorship application?

When property is held in a joint tenancy basis, a deceased owner’s interest in a property does not pass to the deceased’s estate but rather passes directly to the surviving joint tenants. Surviving joint tenants must register a survivorship application to remove the deceased’s name from title. Neither NRST nor land transfer tax are payable by a non-resident joint tenant on a survivorship application, as no consideration is paid when a property interest is acquired by right of survivorship.


The NRST was introduced as a means to cool the residential housing market in the Greater Golden Horseshoe area. However, this new tax does not simply affect foreign buyers and real estate speculators. Many Canadians have international families, beneficiaries and business dealings, and the 15% tax may impose additional costs in planning for their properties. As such, it is important to consider whether the NSRT is an issue when estate planning and administration involves Ontario residential properties.

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.