In 2017, the Ontario government introduced the Non-Resident Speculation Tax (NRST) as part of an attempt to slow a rapidly growing housing market in southern Ontario. Despite measures, the market has continued upwards even faster in recent years. Now, the government is revising the previously instated tax to not only raise rates but to expand coverage provincewide.
The new measures were announced just a day before they came into effect on March 30, 2022. Previously, the NRST was applied to homes purchases in the Golden Horseshoe region by buyers, both individuals and corporations, who were not Canadian citizens or permanent residents. The tax charged 15% on top of the purchase of a property. Under the new changes, that rate would be increased to 20% and be expanded to apply to sales across the province. According to a press release from the Ontario government, this is intended to “strengthen efforts to deter non-resident investors from speculating on Ontario’s housing market and help make homeownership more attainable for Ontario residents.”
In addition, the government has worked to close loopholes in the tax that previously allowed for tax avoidance in some cases. Foreign speculation has been pointed to by some as a factor driving prices up in Ontario, however, to place the blame entirely on foreign investment would be a shortsighted assertion.
In the press release, the province also indicates that they are working with municipalities to instate a vacant home tax as part of a plan in progress to ease affordability issues for Ontario home buyers. A vacancy tax has already been put in place in the City of Toronto and the City of Ottawa is in the process of preparing a similar tax.
Foreign speculation taxes and vacancy taxes have also been used in other areas across the country, notable in Vancouver as the city faces similar affordability concerns as Toronto. In the coming months, further measures are expected to come from both provincial and federal authorities in an attempt to curb rampant price growth and supply deficiencies. The liberal government made it a campaign promise to ban new foreign ownership outright for up to two years, however, they later backtracked on this promise.
Steve Clark, Minister of Municipal Affairs and Housing is quoted in the press release as saying that “there is no silver bullet to solving the housing crisis. Addressing the housing supply crisis is a long-term strategy that requires long-term commitment and coordination with our partners and between all levels of government.”