Buying Residential Property as a Non-Canadian in Ontario: The Intersection of the Prohibition on the Purchase of Residential Property by Non-Canadians Act and NRST
- Alexandre Sinenko
- Jan 13
- 5 min read
Over the last few years, Canadian real estate transactions involving non-Canadians have become significantly more complex. Two separate legal regimes now apply: the Prohibition on the Purchase of Residential Property by Non-Canadians Act (referred to further as the “Act”) and Ontario’s Non-Resident Speculation Tax (referred to further as “NRST”). While the two are legally distinct, application of one usually involves an analysis of the applicability of the other.
The Act, which came into effect on January 1, 2023, is a prohibition. Its purpose is to restrict who may purchase certain residential property in Canada. Ontario’s NRST, by contrast, is a provincial land transfer tax surcharge that may apply even where a purchase is federally permitted.
THE FEDERAL PROHIBITION
The federal prohibition only applies to residential property located within Census Metropolitan Areas (CMAs) or Census Agglomerations (CAs), as defined by Statistics Canada. Residential properties outside all CMAs and CAs (usually rural properties) are completely excluded from the federal prohibition. In those cases, no exemption analysis is required.
If the property is residential and located inside a CMA or CA, the next question is whether any purchaser is a “non-Canadian” under the statute. Applied to individuals, a “non-Canadian” means an individual who is neither a Canadian citizen, nor a permanent resident, nor a registered Indian.
The Act does not apply to the following:
(a) a temporary resident within the meaning of the Immigration and Refugee Protection Act who satisfies prescribed conditions;
(b) a protected person within the meaning of subsection 95(2) of that Act (meaning “refugee”);
(c) an individual who is a non-Canadian and who purchases residential property in Canada with their spouse or common-law partner if the spouse or common law-partner is a Canadian citizen, person registered as an Indian under the Indian Act, permanent resident or person referred to in paragraph (a) or (b);
or
(d) a person of a prescribed class of persons (see section 6 of SOR/2022-250 for definition).
In addition to the statutory exemptions, the Regulations (SOR/2022-250) prescribe certain transactions that are excluded from the application of the Act, for example acquisitions for development purposes. Others include acquisitions by inheritance or gift that will not be discussed here.
Temporary Residents Exemption
There are two types of exempt temporary residents: students attending approved learning institutions, and work permit holders or individuals authorized to work in Canada under section 186 of the Immigration and Refugee Protection Regulations.
Work permit holders/authorized workers must meet the following conditions:
have at least 183 days remaining on the work permit or authorization at the time of purchase; and
must not have purchased more than one residential property.
Where one spouse qualifies as a temporary resident under this exemption, the Act expressly allows their non-Canadian spouse to purchase together with them.
NRST
Ontario’s NRST is a separate regime and calls for an independent analysis. Exemption from the Act does not mean an automatic exemption from NRST.
NRST applies on purchases or acquisitions of residential properties located anywhere in Ontario by individuals who are not Canadian citizens or permanent residents of Canada or by foreign corporations or taxable trustees. For example, a temporary resident who enters Canada under the CUAET program and holds a valid work permit may be exempt from the application of the Act, but not necessarily NRST.
The NRST looks at who the transferees are on title and whether a specific exemption applies to each of them. In other words, if three people are buying a property, and one of them is a non-resident who does not qualify for an exception, full NRST applies to the conveyance. NRST is currently set at 25% of the purchase price.
There are three types of individuals that may be exempt from NRST:
a nominee
a protected person (refugee)
a spouse of
a Canadian citizen
a permanent resident of Canada
a nominee
a protected person
The Nominee Exception
One commonly relied-upon exemption is the nominee exemption. Nominees often include foreign nationals working in professions that Ontario considers in demand and who were issued a nomination certificate. The nominee must meet the following criteria in order to qualify:
the foreign national is nominated under the Ontario Immigrant Nominee Program at the time of the purchase or acquisition
the foreign national has applied or certifies that they will apply to become a permanent resident of Canada before the expiration of their nominee certificate
if the foreign national holds the property with any other transferees, those transferees must be individuals who are Canadian citizens, permanent residents of Canada, nominees or protected persons
all transferees must certify that they will occupy the property as their principal residence within 60 days after the date the conveyance is registered
This exemption is narrow: if there are more than one transferee (buyer), all transferees must themselves be Canadian citizens, permanent residents, nominees, protected persons (but see the Spousal Exemption discussed below). If a nominee purchases with another individual who is a foreign national and not a nominee, this exemption fails on its own and the other individual needs to qualify for another exemption to avoid being subject to the tax.
The Spousal Exemption fills this gap. The term "spouses" includes individuals who are married and who have cohabitated for at least three years or are parents of a child.
This exception expressly excludes a foreign national who purchases with a spouse who is a Canadian citizen, permanent resident, nominee, or protected person — provided that both spouses are going on title as registered owners, there are no disqualifying additional transferees, and all parties certify that the property will be their principal residence within 60 days following closing.
This means that a non-nominee spouse may still be fully exempt from NRST, even though the nominee exemption alone would not apply.
CONCLUSION
In practice, a transaction can be:
Federally permitted because one spouse qualifies as a temporary resident and the other relies on the spousal exemption; and
NRST-exempt because one spouse is a nominee and the provincial spousal exemption applies to the other.
Immigration pathways, nominee designations, and future permanent residence intentions are largely irrelevant unless they meet the precise statutory tests. (Also note NRST rebate). Each regime has its own rules, and each purchaser must be analyzed carefully under both.
For lawyers, agents, and buyers alike, the safest approach is a structured checklist: confirm CMA/CA status, identify non-Canadian purchasers, verify the exact federal exemption relied upon, then separately confirm whether an NRST exemption applies to every transferee. When done properly, compliant transactions are possible — but shortcuts and assumptions can be costly.
*The information contained in this article is general in nature and is not intended as legal advice.
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