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Ontario and Toronto

Land Transfer Tax
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 Table of Contents

1. Introduction............................................................................................................................................................................................1

2. Tax on Registered Conveyances: Section 2 Tax.....................................................................................................................................3

What is the Tax Payable?.......................................................................................................................................................................2
Who Must Pay the Tax?.........................................................................................................................................................................3
When is the Tax Due?............................................................................................................................................................................3
How is the Tax Paid?.............................................................................................................................................................................3

3. Tax on Unregistered Dispositions: Section 3 Tax..................................................................................................................................4

What is the Tax Payable?.......................................................................................................................................................................4
Who Must Pay the Tax?.........................................................................................................................................................................4
When is the Tax Due?............................................................................................................................................................................4
How is the Tax Paid?.............................................................................................................................................................................5

4. Taxation of Certain Transactions............................................................................................................................................................6

Purchase Agreements...........................................................................................................................................................................6
Options to Purchase.............................................................................................................................................................................6
Easements.............................................................................................................................................................................................7
Transfer of Units in a Partnership or Trust...........................................................................................................................................7

5. Value of the Consideration.....................................................................................................................................................................9

Amount Paid and Benefits Conferred...................................................................................................................................................9
Deferred Purchase Price.......................................................................................................................................................................9
Fair Market Value.................................................................................................................................................................................11

6. Nil Consideration: No Tax Payable......................................................................................................................................................12

Registered Transfers Involving Trustees/Nominees..........................................................................................................................12
No Change in Beneficial Owner.........................................................................................................................................................12
Gifts.....................................................................................................................................................................................................13

7. Exemptions and Deferrals: No Section 3 Tax Payable.........................................................................................................................14

Sale of Shares in a Corporation..........................................................................................................................................................14
Affiliate Deferral..................................................................................................................................................................................14
De Minimis Exemption........................................................................................................................................................................16

8. Non-Resident Speculation Tax: Section 2(2.1) Tax..............................................................................................................................18

Lands Affected.....................................................................................................................................................................................18
Persons and Entities Affected.............................................................................................................................................................18
Payment, Reporting, and Statements.................................................................................................................................................19

9. Conclusion............................................................................................................................................................................................21

Notes.........................................................................................................................................................................................................22

Ontario and Toronto Land Transfer Tax iii

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1. Introduction
In the current market of soaring real estate values, The rate of LTT payable in Ontario depends on
particularly in and around the City of Toronto (Toronto several factors, including the location of real property
being the only Ontario municipality to levy its own within the province and the type of property being
transfer tax in addition to the provincial tax), an transferred. Real property located in the City of
understanding of provincial and municipal land Toronto is subject to provincial tax under the Act, as
transfer tax (LTT) has never been more important. well as municipal tax under the Code. Real property
Today, the drive to collect LTT has intensified, and the in the rest of the Province is subject only to provincial
government bodies responsible for collecting that tax tax. Since inputting a purchase price into a draft
are routinely reviewing and revising their regulations transfer in the Ontario land registry Teraview system
and policies to ensure no revenues are lost. In addition will automatically calculate the LTT payable on any
to its use as a revenue generation tool, with the Ontario transfer, and because the rates are published
imposition of the non-resident speculation tax, the on government websites, this paper will not discuss
province has now returned to using the tax for policy the tax rate calculation in great detail.2 Suffice to say,
purposes. This paper provides a general overview of the rates are graduated with differing rates depending
the LTT regime in Ontario and discusses some of the on the total value of the consideration. Once the
key areas in which tax battles are currently being won value of the consideration is above a few million
and lost. dollars, a rough guide is that the LTT will be 2 percent
The legislation governing LTT in Ontario and Toronto for properties outside Toronto and 4 percent for all
is the Land Transfer Tax Act (Ontario) (the “Act”), properties within Toronto; with rates slightly higher
and City of Toronto Municipal Code Chapter 760 (the (2.5 percent outside Toronto and 5 percent inside
“Code”).1 This paper does not address income taxes Toronto) for properties containing at least one and
or other taxes that may be payable on or relevant to not more than two single family residences where the
the transfer of real property in Ontario, such as the consideration is over $2,000,000. If part of the lands
harmonized sales tax. Except where relevant to note conveyed are not used for residential purposes it may
a distinction or difference, this paper treats the Act be possible to apportion the value of the consideration
and the Code as equivalent and provides reference to between the parts of the land and pay the increased
the relevant provision of the Act only. The Act and the residential amount only on the residential portion.3
Code differ in certain material respects, including in LTT is payable under the Act on both registered
relation to objections and appeals (for example, see conveyances of real property and unregistered
the general four year limitation period for assessments dispositions of interests in real property. Though there
or reassessments by the Ontario Ministry of Finance are similarities between each form of taxation, there
(the “Ministry”) under section 12(4) of the Act and the are also important distinctions between the two. We
general six year limitation period for assessments or start, therefore, with a brief overview of the what, who,
reassessments under §760-74 of the Code). Any person when, and how of LTT.
making an objection or appeal should pay particular
attention to articles XII of the Code and sections 13-
14.1 of the Act.

The 2018 Ontario and Toronto Land Transfer Tax Update was originally presented
by Jane C. Helmstadter at the Definitive Tax-Planning Conference for Advisers to
Owner-Managed Businesses by the Canadian Tax Foundation on October 22-23, 2018.

Ontario and Toronto Land Transfer Tax 1

bennettjones.com
 2. Tax on Registered Conveyances: Section 2 Tax

2. Tax on Registered Conveyances:

Section 2 Tax
The basic taxing provision in the Act, section 2(1), When is the Tax Due?
provides that “Every person who tenders for registration On a conveyance pursuant to section 2(1) of the Act,
in Ontario a conveyance by which any land is conveyed to LTT is payable on the registration of the transfer. As
or in trust for a transferee shall pay when the conveyance the provision indicates, LTT may also be pre-paid, in
is tendered for registration or before it is tendered for which case no tax will be payable when the transfer is
registration, a tax computed at the rate of [rate]… of the registered. In order to pre-pay tax certain administrative
value of the consideration.” steps must be taken and payment must be made in
person to the Ministry. It should be noted that pre-
What is the Tax Payable? payment of the tax will ensure that the value of the
The graduated tax rates are set out in detail in section consideration is not reflected on the transfer registered
2(1) of the Act and §760-9 of the Code. The introduction on title but this step will not cause the value of the
to this paper sets out a rough guide to estimating the consideration to be kept confidential. Anyone can
tax payable, and the Teraview system will automatically ascertain the value of the consideration by making a call
calculate the tax during preparation of a draft transfer. to the Ministry.
The term “value of the consideration” is discussed later
in this paper. How is the Tax Paid?
If the registration is made by way of electronic
Who Must Pay the Tax? registration in the Teraview system, LTT is automatically
Section 2.2 of the Act provides that: debited from the trust account of the registering solicitor.
If the registration is made in person at a land registry
Every person who immediately after the office, tax must be paid by certified cheque or bank draft
registration of a conveyance has a beneficial in order for the conveyance to be accepted.
interest in the land that was acquired or
increased as a result of a conveyance or as part
of an arrangement relating to the conveyance is
liable for the tax payable under subsection 2(1),
unless the person has previously paid tax on the
acquisition of or increase in beneficial interest.
We will discuss beneficial ownership of land shortly; at
this point it is enough to say that the transferee of the
land is the party who bears the liability to pay the LTT.

Ontario and Toronto Land Transfer Tax 3

3. Tax on Unregistered Disposition:
Section 3 Tax
In Ontario, it is common for real property to be held When is the Tax Due?
by one person or entity in trust for another person or
entity by virtue of a declaration of trust, a nominee 1. Conventional conveyances
agreement, or some other form of contract. Where such Unlike registered conveyances where the tax payable must
a structure exists, the person or entity holding title is be tendered at registration, tax payable under section 3
commonly referred to as a “nominee” or “trustee” and must be paid “on the thirtieth day after the date of the
the person or entity for whom title is held is referred disposition.”7
to as the “beneficial owner.” There are a number of
commercial and other reasons to create such a structure, 2. Conveyances of interests in “layered” or “stacked”
partnerships or trusts
each of which is beyond the scope of this paper. For our
purposes, it is sufficient to note that since July 19, 1989, As described in part 4(d) of this paper, a transfer of
the Act has taxed dispositions of beneficial interests an interest in a partnership or a trust will generally be
in land and, as a result, off-title transfers of land from a taxable transaction. In the case of a transfer of an
one beneficial owner to another are taxable. Specifically, interest in a partnership in which fifty or more persons
subject to the exclusions in section 3(1), the Act defines hold an interest (a “qualifying entity”)8 and which owns
a disposition of a beneficial interest in land as including: real estate in Ontario through another partnership or a
“(a) a sale, transfer or assignment, however effected, trust (also known as “layered” or stacked” partnerships
of any part of a beneficial interest in land; and (b) any or trusts) the tax is payable quarterly. This concession is
change in entitlement to or any accretion to a beneficial designed to ease the administrative burden on taxpayers
interest in land.”4 who, through a partnership or trust, invest in a widely
held partnership that holds a portfolio of real estate in
What is the Tax Payable? Ontario. In this situation, absent the concession, an
increase either directly or indirectly in the partnership
The tax rate applied to a disposition of a beneficial interest of the taxpayer triggers a requirement to file a
interest in land is equivalent to the tax on a registered return and pay tax within 30 days after the increase in
transfer. Pursuant to section 3(2), tax on a disposition the taxpayer’s partnership interest. The completion of
of a beneficial interest in land is payable “at the rates dividend re-investment under a so-called dividend re-
otherwise determined under section 2.”5 investment program for a partnership, or the completion
of a capital call where not all partners/beneficiaries
Who Must Pay the Tax? contribute equally are all examples of common
Tax under section 3 of the Act is payable “by every person occurrences that might alter the entitlement to a share
who acquires a beneficial interest in land or whose of profits (or partnership interest) of each partners/
beneficial interest in land is increased as a result of the beneficiary in such partnership/trust and thus constitute
disposition.”6 Again, this means that the transferee is a taxable event. This quarterly filing is provided for in
liable for the LTT payment. Ontario Regulation 343/18 under the Act (the “Timing
Regulation”). The timing should also be the same for
municipal tax as §760-14 of the Code states that “No tax

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 3. Tax on Unregistered Dispositions: Section 3 Tax

is payable with respect to a transaction which may be statement of adjustments for the transaction, copy of
exempt from time to time under the Land Transfer Tax Act the agreement pursuant to which the beneficial interest
or any other statute of the Province of Ontario”, although, was conveyed (if distinct from the purchase agreement),
as of the date of publication of this paper, the city has not copy of the nominee agreement(s) pursuant to which the
updated its posted materials to speak to such quarterly nominee holds title for the beneficial owner, copies of the
filings. partnership agreement and register of partners for any
Note that part 4(d) of this paper discusses taxation of partnership beneficial owner (which is not in a prescribed
these interests in general, and part 7(c) of this paper form but can be similar to a shareholders’ register or
discusses the de minimis exemption that applies to these simply a list of partners), and forms authorizing a law
conveyances in certain circumstances. firm to represent the named transferee (if the return is
being submitted by a law firm). Guides to the preparation
of this material are available online.13
How is the Tax Paid?
2. Conveyances of interests in “layered” or “stacked’
1. Conventional conveyances partnerships or trusts
Unlike registered conveyances, tax payable under section Concurrently with the passage of the Timing Regulation,
3 must be paid by submitting a certified cheque, hard- the Ministry published an alternate form of hard-copy
copy return, and supporting materials to the Ministry, return which form must be used for conveyances
rather than to the land registry office.9 If the land in of interests in “layered” or “stacked” partnerships
question is located in the City of Toronto, true copies of or trusts (see part 3(c)(ii) of this paper for further
all documents submitted to the Ministry must also be details about these conveyances).14 This alternate form
submitted to the City of Toronto along with the municipal permits consolidated quarterly filings for these types
portion of the tax payable.10 The obligation to submit of conveyances and requires similar information to
a return lies with both the nominee and the beneficial the typical hard-copy return but, in schedule 2 of such
owner, although in practice many include in the covering form, also requires details about the type of disposition
letter to the Ministry enclosing the return a request that and the partner or beneficiary’s interest in the “layered”
the return by the beneficial owner be accepted as the or “stacked’ partnership or trust.15 As of the date of
return by the nominee.11 It is important, in the case of a publication of this paper the City of Toronto had not
nominee that is not owned or controlled by the beneficial published an updated form of return so the appropriate
owner, that nominee keep this obligation in mind. If, for return is, for the time being, the existing City of Toronto
example, in the case of a fund which is structured as a form (see note above).
limited partnership, a general partner consents to the
transfer of a partnership interest and the general partner
controls the nominee, it is incumbent upon the general
partner to ensure that the partner who acquires the
interest file its LTT return and note that the return is also
to satisfy the obligations of the nominee under section
5(8).
The form of hard-copy return under the Act is available
online, as is the form required by the Code.12 Along
with the hard-copy return, a copy of the agreement of
purchase and sale pursuant to which the transfer was
effected must be provided. Additionally, the Ministry will
typically request the following supporting documentation:

Ontario and Toronto Land Transfer Tax 5

4. Taxation of Certain Transactions
It is obvious that LTT is payable on a conventional Options to Purchase
sale of land between vendor and purchaser, but the The term “convey” is also defined to include “the giving
definition of “convey” in the Act significantly broadens of an option upon or with respect to any land in Ontario”.
the scope of transactions that may be subject to tax. The As such, the grant of an option to purchase land is
Ministry publishes a helpful guideline in respect of these taxable under section 2 if the conveyance document
transactions, entitled “Guide to the Application of the creating the option is tendered for registration. The Act
Land Transfer Tax Act to Certain Transactions” is less clear regarding unregistered options because
(the “Certain Transactions Guide”).16 section 3 does not impose tax based on a “conveyance”
but based on unregistered dispositions of an interest
Purchase Agreements in “land” As noted above, section 3(1)(g) specifically
Though the term “convey” is defined to include “agreeing excludes unregistered agreements of purchase and sale
to sell land in Ontario”, since section 2 tax is payable from the definition of an beneficial interest in land and
only when a person “tenders for registration in Ontario an option may be a lesser interest than an agreement of
a conveyance by which land is conveyed”, the mere purchase and sale. In practice, to the knowledge of the
signing of a purchase agreement does not crystallize authors, most people do not remit tax on unregistered
an obligation to pay LTT under section 2. Likewise, options, even where consideration is paid for the option.
the execution of a purchase agreement alone does not The value of the consideration for the grant of an
trigger section 3 tax because of the saving provision option is determined pursuant to the definition of
in section 3(1)(g), which provides that the value of the “value of the consideration”: namely, the price paid,
consideration must change hands before there is a liabilities assumed, and benefits conferred as part of
disposition of a beneficial interest in land. the arrangement relating to the conveyance. Since the
Though the signing of a purchase agreement itself does grant of the option is only a grant of a right to acquire
not trigger an obligation to pay tax, the registration of the property, not a conveyance of the underlying property
that purchase agreement (should the parties wish to do itself, the value of the consideration is only the amount
so in order to protect the purchaser’s right to acquire the paid to acquire the option. This is confirmed by the
land against third parties, or for other reasons) does. This Ministry’s position in the Certain Transactions Guide,
is evident from section 2(1) of the Act, and is confirmed which states, “The value of the consideration is the
by the Ministry’s position in the Certain Transactions amount of the consideration paid by the optionee to
Guide, which states “an agreement of purchase and sale acquire the option, and not the option exercise price”.18
or any related notice or caution is a taxable conveyance Likewise, when an option agreement is transferred by the
when tendered for registration.”17 Upon registration of the original holder of the option to a purchaser of the option,
transfer by which title is actually conveyed, a statement LTT is payable on the purchase price paid for the option
can be completed in the transfer stating that tax was rights.19
already paid so that tax is not paid twice.

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 4. Taxation of Certain Transactions

Easements
An easement is a form of tenement, estate, or right to
land and, as such, falls within the definition of “land”
in the Act. A grant or transfer of easement is, therefore,
taxable under section 2 or section 3 just like a freehold
interest in land, with tax payable on the value of the
consideration exchanged.

Transfer of Units in a Partnership or Trust

Sections 2.2 and 3(3) of the Act state that tax is payable
by every “person” who obtained an interest in land.
The term “person” is not defined in the Act, but means
natural persons as well as, pursuant to section 87 of the
Legislation Act, 2006, corporations.20 Partnerships (as well
as trusts), on the other hand, are not persons but rather
are a collective of, or a relationship between, persons.21
The Ministry’s interpretation of the Act is in line with
this legal perspective, and, accordingly, the Ministry
looks through all partnerships or trusts until it reaches a
natural person or corporation. Specifically, the Ministry’s
administrative position states that “a partnership is not
a legal entity and therefore a conveyance or disposition
of land to a partnership, whether the partnership is a
general partnership or a limited partnership, constitutes a
conveyance to the partners of the partnership as tenants-
in-common and in proportion to their partnership
interest(s).”22 Likewise, in respect of trusts, the Ministry’s
published guide notes: “The [Ministry] does not consider
a “trust” to be an entity and looks through the trust to the
beneficiaries.”23 In the case of a discretionary trust where
the class of beneficiaries is not fully known (for example,
“all of the issue of John Smith”), the determination is
somewhat more complicated. See Part 3 of the Ministry’s
guide “A Guide for Real Estate Practitioners - Land
Transfer Tax and the Registration of Conveyances of Land
in Ontario” for some assistance.24
As a result of this position, the transfer of units in
a partnership that beneficially owns real property is
considered a disposition of a beneficial interest in that
real property for which tax is to be payable under section
3.25 For a discussion of the value of the consideration
attributable to such disposition, see the next section.

Ontario and Toronto Land Transfer Tax 7

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 5. Value of the Consideration

5. Value of the Consideration

Amount Paid and Benefits Conferred limited partnership, for those not accustomed to the
The term “value of the consideration” is specifically way the Ministry “looks through” a partnership. As
defined in the Act to capture many forms of consideration noted above, the transfer of a partnership interest is
that might be paid in connection with the sale of real treated as a transfer of a beneficial interest in land for
property. In a typical real property purchase, the value the purposes of the Act with the Ministry effectively
of the consideration is the purchase price and will be treating the partners as co-owners. If the partnership
determined pursuant to section (a) of the definition of has mortgaged its land, the Ministry takes the position
such term, being: that the partner who acquires a partnership interest has
assumed a portion of the mortgage equal to the share of
the gross sale price or the amount expressed in the partnership interest acquired. As a result, the value
money of any consideration given or to be given of the consideration for the purposes of the Act can
for the conveyance by or on behalf of the transferee be significantly higher than the purchase price for the
and the value expressed in money of any liability partnership interest.
assumed or undertaken by or on behalf of the
transferee as part of the arrangement relating to
the conveyance and the value expressed in money
Deferred Purchase Price
of any benefit of whatsoever kind conferred directly It is critical when structuring an agreement of purchase
or indirectly by the transferee on any person as and sale including real property that separate contractual
part of the arrangement relating to the conveyance obligations between buyer and seller are not wound
[emphasis added].26 into the purchase agreement such that benefits of those
contractual obligations become part of the “arrangement
This definition captures a number of potential forms of
relating to the conveyance” and, as such, become
payment, including the outstanding principal amount
taxable. The court’s 1987 decision in Assaly,30 followed
of any mortgage assumed by the transferee. The broad
recently in OPTrust,31 provides a cautionary tale about
definition can also include amounts paid to acquire
creating strong connections between the land and
personal property. To use the words of the Ontario
other obligations in such contracts. In Assaly, the court
Superior Court of Justice, “the definition of “value of the
concluded that where a builder-vendor agreed to sell
consideration” clearly includes consideration for benefits
land to a purchaser and also to build a home on that
that are not land so long as they are related to the
land, LTT was payable on both the value of the land and
conveyance.”27
the construction costs of the home. The court came to
Management and leasing fees payable under an the conclusion reluctantly, making it clear that typically a
agreement of purchase and sale (or agreements required purchaser of raw land would pay LTT only on the raw land
under the agreement of purchase and sale) have, for and that any future construction on the land would not be
example, been found to be taxable, as have nursing taxed. In the case before the court, however, the parties
home licenses sold together with a nursing home.28 To had wound the construction together with the land
the extent there is a significant connection between the acquisition, even making the land purchase agreement
benefit being conferred and the land, the courts are more conditional on the construction contract being entered
likely to hold that such benefit is taxable.29 into. The court cautioned that “with appropriate tax
Determination of the value of the consideration when planning such a result could be avoided”, but in the case
dealing with the sale of a partnership interest can before the court it could not hold otherwise.
lead to surprising results, particularly in the case of a

Ontario and Toronto Land Transfer Tax 9

Clearly the court’s caution to use appropriate tax Interestingly, the court in OPTrust found that the
planning holds just as true today as it did in 1987, purchaser should have made use of the Ministry’s
as the 2016 case of OPTrust indicates. In OPTrust, a administrative policy of using undertakings when the
purchaser again contracted with a vendor-builder to value of the consideration hinges on a contingent
acquire land and have the vendor build on that land. In event.33 Where a portion of the purchase price hinges
order to secure the payments that would become due on a contingent event, such as achieving a certain
to it under the agreement, the vendor registered $26 rezoning which grants additional density, a purchaser
million in mortgages on title at close (no funds were can pay tax on the known component of the value of
ever advanced under the mortgages - they were there the consideration at the time of closing and give the
simply to secure payment of future construction fees). undertaking to pay tax on the contingent or deferred
The purchaser paid LTT on the land purchase price of purchase price. At the time that the contingent or
$16 million, as well as the $26-million contingent liability deferred purchase price is known, the tax will become
secured by the mortgages. When, however, the seller payable. Unfortunately, the Ministry has recently adopted
failed to meet the milestones and to earn the additional a new approach of charging interest at the prescribed
consideration and the development agreement was rate from the date of closing up to the date of receipt of
terminated, the purchaser demanded a refund of the LTT payment. The theory behind this appears to be that the
paid on the $26 million. The Ontario Minister of Finance deferred payment was a “liability assumed” on closing
(the “Minister”) refused and the parties ended up in even though the amount of the payment was unknown
court. The court found for the Minister, holding that the and that the tax was therefore due on closing. Failure to
development services were a liability assumed as part pay the tax attracts interest. This can be quite expensive,
of the arrangement relating to the conveyance. Despite although not as expensive as paying tax on a deferred
objections from counsel to the purchaser, the court found purchase price that never becomes payable.
that the contingent nature of the obligation to pay for
the services did not matter and instead followed another
1987 case, stating that “It is the value of the services
calculated at the time of the transfers that must govern
the imposition of tax.”32

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 5. Value of the Consideration

Fair Market Value

In some circumstances the value of the consideration other instances in which the value of the consideration is
is not the amount paid, liabilities assumed, or benefits deemed to be the fair market value of the land:
conferred, but instead is deemed to be the fair market
value of the land in question. The first important instance i. Mortgage foreclosures: when land is transferred to
of this deeming occurs in respect of leasehold interests in a mortgagee, either as part of a foreclosure or by
land. the mortgagor in satisfaction of the debt, the value
of the consideration may be the fair market value of
Subject to one important exception, a conveyance the land if such amount is less than the full amount
(which includes an initial grant) of a leasehold interest is (including all protective advances) outstanding under
generally taxable under the Act. The definition of “land” the charge.36
under the Act includes “tenements and hereditaments
and any estate, right or interest therein”, which, of course, ii. Trustee to trustee transfers, where beneficial
includes leasehold interests. Likewise the definition of ownership has changed and consideration was
“conveyance” includes “any instrument or writing by paid: see the discussion regarding trustee to trustee
which land is conveyed and includes … a caution or notice transfers for nil consideration, below.37
of any kind in writing signifying the existence of any
instrument or writing by which land is conveyed”, which iii. Transfer to a corporation, taking back shares: if land
includes leases.34 The exception to this rule is section 1(6) is transferred to a corporation and the payment of any
of the Act, which provides that no tax is payable in respect part of the consideration consists of the allotment and
of leases where the term yet to run does not exceed 50 issuance of the corporation’s shares (which would
years (including all extensions and renewals included in include a transaction structured as a section 85(1)
any document). For leases having a term of greater than rollover pursuant to the Income Tax Act (Canada)),
50 years, therefore, tax is payable and paragraph (c) of the the value of the consideration is deemed to be the fair
definition of “value of the consideration” states that tax market value of the land.38
is payable on “the fair market value, ascertained as at the iv. Transfer from a corporation to its shareholders: if land
time of the tender or submission for registration, of the is transferred by a corporation to its shareholders, the
land to which the lease extends or of a smaller portion of value of the consideration is deemed to be the fair
such land if only such smaller portion is conveyed.”35 market value of the land.39
As is the case with calculation of the value of the In each of these cases other than (i), the actual purchase
consideration for the transfer of a partnership interest, price paid for the land can be significantly lower than the
the determination of the value of the consideration value of the consideration on which the tax is calculated
for a leasehold interest can lead to surprising results. and payable.
If the leasehold interest has little value (which might
be the case if there were under-market subleases) it is
possible that the purchase price payable with respect
to the leasehold interest would be lower than the fair
market value of the underlying fee simple. Under those
circumstances, the value of the consideration will exceed
the amount of the purchase price.
In addition to leasehold interests in land, there are several

Ontario and Toronto Land Transfer Tax 11

6. Nil Consideration:
No Tax Payable
In most circumstances where no consideration passes change in beneficial owner and valuable consideration
between the parties to a real property related transaction, was given in connection with such transfer. If, in
the Act recognizes that no LTT is payable. This may occur connection with the change of beneficial owner, a return
in several situations. was filed and tax was paid then these facts may be
recited in the supplementary affidavit; however, if no
Registered Transfers Involving Trustees/Nominees tax was paid (which might arise if the transferor and
transferee were affiliates and an affiliate deferral was
In transactions involving trustees/nominees there are obtained or if the transfer was a transfer of a partnership
three circumstances where transfers for no consideration interest to which the de minimis exemption applied)
commonly occur:40 then tax will be payable. In these situations a transfer is
i. Beneficial owner to trustee: Where a party wishes to deemed to have been made at the fair market value of
create a nominee—beneficial owner relationship and the beneficial interest in the land rather than being a “nil
to do so effects a transfer of legal title from itself to a consideration” transfer. Section (f) of the definition of
nominee title holder. “value of the consideration” is a holdover from an earlier
iteration of the Act and represents an early attempt by
ii. Trustee to trustee: Where a nominee title holder wishes the Ministry to curb off-title beneficial transfers. It now
to transfer legal title from itself to a different nominee arguably produces an unintended result, but it remains
title holder who will hold title for the same beneficial nonetheless and must be considered whenever an affiliate
owner. deferral is contemplated.

iii. Trustee to beneficial owner: Where the beneficial owner

wishes to take back title from the nominee title holder No Change in Beneficial Owner
and so become both the legal title holder and the Following the same line of reasoning that permits a
holder of the beneficial interest in land. trustee to trustee (for the same beneficial owner) transfer
under section 2 of the Act without payment of tax, a
There is a specific Teraview statement that must be
disposition of a beneficial interest where there is no
completed in the registered transfer for each of these
change of beneficial owner for the purposes of the Act
situations. Additionally, the transferee or the transferor
will not be taxable to such extent. Situations like this may
must sign and submit a supplementary affidavit that
occur where partnerships or trusts are involved and are
makes a number of statements about the transfer.41 The
possible because of the view of partnerships and trusts at
statements required in this affidavit are intended to prove
law and in the Ministry’s eyes (see discussion above).
to the Ministry that the value of the consideration is nil
(and that it should not be deemed to be the fair market Given this position, it is possible that the tax payable
value of the beneficial interest in the land). on a disposition of a beneficial interest in land to a
partnership will be reduced where the transferor is either:
One potential problem arises in the case of trustee to
(a) a partner in such transferee partnership, or (b) itself
trustee transfers where there has been a change in the
a partnership possessing common partners with the
beneficial owner. Section (f) of the definition of “value
transferee partnership. The tax may be reduced because
of the consideration” provides that tax is payable on a
the interest in land being disposed of is less than 100
trustee to trustee transfer if there has in the past been a

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 6. Nil Consideration: No Tax Payable

percent of the land. Since the disposition is for less than Gifts
the whole of the interest, the amount of the consideration Gifts of real property are not specifically excepted
attributable to such disposition is reduced in a like from taxation under the Act, but if the value of the
proportion. consideration passing between the parties is actually
In such situations, as with all beneficial dispositions, zero (absent the transaction being one in which the
a complete return must be filed in hard-copy with the value of the consideration is deemed to be the fair
Ministry, together with the supporting documentation market value of the land), no LTT will be payable. On a
mentioned earlier in this paper. In addition to such registered transfer, specific Teraview statements must be
supporting documentation the Ministry will also typically completed where the transaction is a result of a gift, and
request the partnership register(s) and partnership the relationship between the parties, as well as the reason
agreement(s) of the partnership(s) involved. If there is no for the conveyance, must be set out in the transfer. On
change in beneficial ownership, no return is required to an unregistered disposition, a hard-copy return must be
be filed because no tax is payable.42 filed.44
Relevant to this point, as well as being an interesting
illustration of the difference between section 2 tax and
section 3 tax, and of the increased flexibility that section
3 permits to a transferee, is the 2007 Ontario Court of
Appeal decision Woodbine Cachet West Inc. v. Ontario
(Finance) (“Woodbine”).43 In Woodbine, a nominee title
holder owned land for two beneficial owners; it had
also charged the land to the Bank of Nova Scotia. The
nominee defaulted on the mortgage and the bank sold
the land to a new nominee (Woodbine), who acquired
the land in trust for one of the existing beneficial owners.
The existing beneficial owner argued that it should only
have to pay LTT on the percentage by which it increased
its interest in the land. The Minister, and the court,
disagreed. The decision turned on the fact that the sale
was being completed by the bank through its power of
sale. The bank was not acting as agent for anyone, and it
was selling, pursuant to a registered conveyance under
section 2 of the Act, the entire interest in the property that
the original nominee had mortgaged to it. Accordingly, tax
was payable on the entire purchase price.
Woodbine had essentially been arguing that it should
have the benefit of the flexibility afforded under section
3 of the Act and the court, rightly in our opinion, denied
it that flexibility. In this scenario, it was perhaps not
possible for Woodbine or the bank to complete an
unregistered disposition under section 3, but the case is
illustrative of the differences between the two sections
and how proper tax planning and structuring can have an
important impact.

Ontario and Toronto Land Transfer Tax 13

7. Exemptions and Deferrals:
No Section 3 Tax Payable
In certain circumstances, LTT under section 3 of the Act Affiliate Deferral
is either not payable, may be deferred, or is subject to The Act recognizes that in some circumstances there
an exemption of some kind. We will address the most may be a legitimate need to transfer land to an affiliated
commonly encountered of these situations. entity where it would be unjust to impose tax. As such,
section 3(9) and 3(11) of the Act provide for the deferral
Sale of Shares in a Corporation of, and potential cancellation of, LTT that would otherwise
As we have seen, an unregistered disposition of a be payable. The rules governing the affiliate deferral
beneficial interest in land is subject to tax under section mechanism are complex and must be carefully adhered
3 of the Act, but does this include a sale of the shares to; the points in this paper should serve as a general
of a corporation that owns land? The answer is no, guide only. Also useful is the Ministry’s published guide
provided that such corporation holds title to the land in “Land Transfer Tax and the Treatment of Unregistered
its own right (not as trustee for another person), which Dispositions of a Beneficial Interest in Land” (the
is consistent with both the interpretation of the term “Unregistered Guide”).46
“person” under the Act as including a corporation, and In brief, the Act provides that an affiliate deferral is
with the Ministry’s view of a corporation. The Minster’s available for corporation to corporation transfers where
statements in the published guide regarding unregistered the two corporations are affiliates and the transferee
dispositions clarify as follows: corporation: (i) undertakes to remain an affiliate of
The transfer of shares of a corporation which the transferor corporation for three years following the
holds land in its own right does not ordinarily transfer; (ii) undertakes that the beneficial interest in
attract tax under the Act. The Ministry considers the land will continue to be owned by it or an affiliate for
that it is well-established law that the property of three years following the transfer; (iii) posts security in
a corporation is that of the corporation and not of the amount of the tax that would otherwise be payable
the shareholders of the corporation. Accordingly, together with interest for three years calculated at the
the transfer of shares of such a corporation will not prescribed rate; and (iv) no conveyance or instrument
affect the ownership of the property ... Care must or electronic document evidencing the disposition has
be exercised in instances of the transfer of shares been registered at the end of the three year period.47 At
of the corporation which holds the registered or the end of the three year period, the Ministry will return
legal title to land but not the beneficial title to the the security posted if: (i) the undertaking has been
land. This is because in most trust transfer cases, satisfied; (ii) no conveyance or instrument evidencing
the transfer of shares of a trustee corporation the disposition of the beneficial interest in land has been
signals a change in the underlying beneficial registered; and (iii) no subsequent conveyance has been
ownership of the land. While the transfer of shares registered nor beneficial disposition occurred in respect
of the trustee corporation may not be of itself a of the land for which tax was paid.48 Parties wishing to
taxable matter, the change in beneficial ownership make use of this section must also review the provisions
of the land, which often occurs coincident with the of section 3(15) to ensure that they meet the definition of
transfer of the shares, is taxable.45 “affiliate.”

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 7. Exemptions and Deferrals: No Section 3 Tax Payable

In addition to the undertaking, the Ministry will also affiliate deferral purposes only) be deemed to continue
require a hard-copy submission of a return on the to be an affiliate of the transferee corporation. If a party
acquisition of a beneficial interest in land, a copy intends to rely on section 3(12) for this purpose, it is
of the agreement of purchase and sale, and other critical to keep in mind the following:
supporting documents. Prior to returning the security,
the Ministry will require evidence of the satisfaction of i. Transfer to a nominee: The affiliate deferral cannot
the undertaking, which may include: an affiliation chart be used to avoid section 2 LTT - it applies only to
showing the corporations graphically, details of any unregistered dispositions of a beneficial interest in
name change or amalgamation in the last three years, land under section 3.49 Prior to completing an affiliate
an affidavit of a director of the corporation making deferral, a corporation that holds both legal and
statements to support the information on the chart, beneficial title to land must complete a beneficial
copies of shareholders and directors ledgers, copies of owner to trustee transfer. Such transfer is, itself,
title abstracts, and copies of all registered instruments not taxable (see the section of this paper regarding
since the date of the disposition. situations where section 2 tax is not payable), but is
a prerequisite to completing an affiliate deferral. If,
As noted above in section 5(c)(ii), completion of an however, the corporation already holds only a beneficial
affiliate deferral will eliminate the transferee corporation’s interest in land, no preliminary step is required.
ability to complete a trustee to trustee for same beneficial
owner transfer at any point in the future until the ii. Organize affiliate entities before dissolution and
beneficial ownership changes hands and tax is paid. complete transfer before or concurrently with
The affiliate deferral provisions are useful for any dissolution: section 3(12) specifically states that the
number of restructuring purposes. A person may wish, corporations claiming the deferral must be affiliates
for example to organize a new investment vehicle which “immediately before the winding-up or dissolving”
will receive funds from investors and then acquire and that the deferral is available only in respect of
the beneficial interest to properties already owned by “any disposition of a beneficial interest in land made
affiliated parties. Or a person may wish to transfer the before the winding-up or dissolution of the corporation
beneficial interest in properties from one investment or in the course of any distribution of property of
vehicle to another. In each instance the affiliate deferral the corporation on the winding-up or dissolution.” If
mechanism permits these transactions on a tax-free the dissolution occurs before the affiliate structure
basis. In these examples registered title could be left in is organized, or if the beneficial disposition occurs
the original owner or, by completing a beneficial owner post-dissolution (for example, via a power of attorney
to trustee (or trustee to trustee) registered transfer, granted on dissolution), the deferral will not be
registered title could be transferred to another person to available.
be held for the new beneficial owner. An additional consideration when structuring and
The affiliate deferral provisions can also be used when completing an affiliate deferral is maintenance of clean
a party wishes to wind up or dissolve a corporation that title for the three year period. The Act is clear that if a
holds title to real property. Through section 3(9), the “conveyance or instrument evidencing the disposition
dissolving corporation can transfer its beneficial interest of the beneficial interest in land has been registered”
in real property to another corporation or a corporate the security will not be returned.50 But what exactly
shareholder and have the tax deferred and ultimately constitutes a conveyance or instrument evidencing
cancelled. section 3(12) permits for such a transfer-out the disposition of the beneficial interest in land? The
and subsequent dissolution of a transferor corporation, registration of a conveyance of legal title to the transferee
and provides that the dissolved corporation will (for corporation is such an instrument.51 Additionally, the

Ontario and Toronto Land Transfer Tax 15

registration of a conveyance of legal title to a trustee/ the appellant acquired the property (that is that there
nominee for the transferee corporation is deemed to be has been an acquisition), but does not refer to a specific
such an instrument, underscoring the need to complete disposition” and so did not offend this provision of
the transfer of legal title to a nominee corporation prior to the Act.54 The court went on to say that “Evidence of
completing the unregistered disposition to the transferee “the” disposition would at the very least have to identify
corporation.52 the entity disposing of the property … and the entity
In addition to these two situations, each of which is benefitting from the disposition … The recital in the
specifically enumerated in the Act, the decision in development agreement with the city of Niagara Falls
2143569 Ontario Inc. v. Ontario (Minister of Revenue) does not accomplish this.”55
(“214”) is instructive.53 In this decision the appellant Though the 214 decision was a successful outcome for
corporation and two of its affiliates, NMH and YHM, the taxpayer, clearly the safest course of action is not to
properly structured an affiliate deferral whereby: (i) YHM refer to the beneficial owner in any registered instrument.
initially held legal and beneficial title; (ii) YHM transferred
legal title to NHM; and (iii) YHM subsequently De Minimis Exemption
transferred beneficial title to the appellant (with NHM
holding legal title for the appellant). Once the three At the time that section 3 of the Act was enacted, Ontario
year period had elapsed, the appellant submitted the Regulation 70/91 (the “De Minimis Regulation”) was
required evidence of compliance with the undertaking introduced. The De Minimis Regulation provides for
and requested a return of its security. The Minister an exemption from tax on the transfer of partnership
refused to return the security because during the three interests below a certain threshold.56 Until February 17,
year period a development agreement between the City 2016, the De Minimis Regulation provided simply that
of Niagara Falls and the appellant had been registered on “Section 3 of the Act does not apply to a disposition of a
title. The development agreement stated, in its recitals, beneficial interest in land if it is an interest of a partner
that “the trustee holds title to the lands … as trustee in a partnership and if the person acquiring the interest
for the owner”, where trustee was defined as NMH and would not be entitled … to a percentage of the profits of
owner was defined as the appellant. The development the partnership … [of ] more than five percent …”57
agreement did not use the term “beneficial owner”, nor As of February 18, 2016, however, the De Minimis
did it discuss YHM, nor did it mention how the appellant Regulation was substantially revised, to curb what the
came to obtain its interest in the property. Ministry perceived to be an abuse of this exemption.
Consistent with its standard practice, the Ministry took The revised De Minimis Regulation has retroactive effect,
the position that the mere mention of the appellant applying to any transaction back to July 19, 1989.58
transferee in a document on title constituted the In response to criticism from the legal community,
development agreement an instrument evidencing the however, including a joint submission from the Chair of
disposition of the beneficial interest in land, breaching the Ontario Bar Association Taxation Law Section, the
the undertaking and permitting the Ministry to cash in Canadian Bar Association, and the Chartered Professional
the security. The court disagreed, and in doing so gave Accountants Joint Taxation Committee, the Ministry
useful guidance about the interpretation of this section published an update to its bulletin on the amended De
of the Act. The court took the view that the use of the two Minimis Regulation stating that it would not reassess or
words “the disposition” in section 3(11) of the Act meant prosecute transactions that occurred prior to February
that an instrument must not just refer to any disposition 18, 2012 (which follows the general four year limitation
of land, but the specific disposition that is the subject period for assessments or reassessments by the Ministry
of the deferral application. According to the court, the under section 12(4) of the Act), and that if disclosure is
mention of the appellant as owner “may evidence that made prior to December 31, 2016, no interest would be
applied to amounts payable until December 31, 2016.59

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 7. Exemptions and Deferrals: No Section 3 Tax Payable

The changes to the De Minimis Regulation apply equally Assuming that a transaction is structured properly in
to municipal tax pursuant to §760-14 of the Code order to make use of the exemption, the implication of
which states that “No tax is payable with respect to a the De Minimis Regulation and the Act is that no return
transaction which may be exempt from time to time is required to be filed in respect of an acquisition of
under the Land Transfer Tax Act or any other statute of the a beneficial interest in land that does not meet the de
Province of Ontario”. Likewise, if a party is entitled to a minimis threshold. Because the De Minimis Regulation
refund under the Act a refund is also available under the states that section 3 does not apply to transactions that
Code,60 and items that call for the judgment of the city meet the specified criteria, and because section 5(7) of
under the Code are deemed to be satisfied or determined the Act provides that only persons liable to pay tax under
in the same manner as decided by the Ministry under the section 3 must file a return, a partner acquiring a less
Act.61 Note, however, that the city has not published a than five percent entitlement to profit in a partnership
bulletin confirming that it will not reassess or prosecute (assuming the other criteria is met) is not required to file
transactions occurring prior to a certain date, and that notice of same nor a return to the Ministry.
the City has a general six year limitation period for
assessments or reassessments under §760-74 of the
Code.
The revised De Minimis Regulation does not eliminate
the exemption completely. Rather, the amended language
states that the exemption is not available “if the partner
who acquires the partner’s interest in the partnership is a
trust or another partnership”.62
As a result, the exemption may still be used, but not
by “layered” or “stacked’ partnerships or trusts. Where
real estate investment trusts hold their interests in
land through a limited partnership, for example, the
exemption is no longer (and is deemed never to have
been) available. In 2016, the retroactive nature of this
De Minimis Regulation was of serious concern and
parties who had completed such transfers scrambled
to review such transactions prior to the end of 2016 to
determine if additional disclosure and payment was
required. Going forward from 2016, greater care must be
taken in structuring new transactions to ensure that the
revised De Minimis Regulation is complied with and no
more than a single trust or partnership is involved in a
transaction that seeks to rely on this exemption (which
may have income tax implications for property owners,
depending on the structure used).
For dispositions of interests in “layered” or “stacked’
partnerships or trusts which are widely held (meaning,
in which 50 or more persons hold an interest), special
timing and submission rules apply to the payment of the
applicable tax. See parts 3(c)(ii) and 3(d)(ii) of this paper
for a discussion about such rules.

Ontario and Toronto Land Transfer Tax 17

8. Non-Resident Speculation Tax:
Section 2(2.1) Tax
Effective April 21, 2017, the Ontario government, in an designed for use and/or occupation as the residence of a
effort to curb what it perceived as harmful residential family it will be a single family residence.
property market speculation by non-resident investors, If land being transferred includes both residential
introduced an additional tax (the “NRST”) of 15 percent and non-residential lands, section 2.1(6) of the Act
of the value of the consideration paid for the transfer provides (in a similar fashion to section 2(2) of the
of certain residential real estate in the Greater Golden Act which deals with partial residential lands for the
Horseshoe Region. The Greater Golden Horseshoe determination of section 2 tax) that the NRST will apply
Region is a significant area of Southern Ontario focused only to the consideration paid for the portion of such
around the municipalities of Toronto and Hamilton but land that is residential. Technically, the Act only permits
defined to include a list of 21 cities, regions, and counties an apportionment of the consideration if the Minister
as set out in the Act.63 The NRST is levied under the considers it practicable, meaning that the right to an
Act and collected along with LTT, and applies to both apportionment is not guaranteed, but the Ministry’s
registered transfers and unregistered dispositions of a interpretive bulletin indicates that self-assessments
beneficial interest in land.64 will be considered: “A reasonable self‑assessment
is required by taxpayers in apportioning the value of
Lands Affected the consideration for the purposes of the NRST. The
The NRST applies only to “designated land”, which apportionment would be based on the value of the
is defined as land that contains at least one and not residential land as compared to the non‑residential land,
more than six single family residences, in the “specified not the square footage of the two”. Teraview statement
region”, defined as land in any one of the 21 cities, 9172 specifically permits apportionment by a transferee in
regions, and counties as set out in Act, focused around a registered transfer.66
the municipalities of Toronto and Hamilton.65
Until the introduction of the NRST it was only relevant to Persons and Entities Affected
consider whether land contained single family residences The NRST applies if land is conveyed to a “foreign entity”
for the purposes of determining the rate of tax payable or “taxable trustee”. A foreign entity includes foreign
under the Act, and even then practitioners needed only nationals (natural persons who are not Canadian citizens
consider if there were one, two, or more than two single nor permanent residents) and foreign corporations.67
family residences on the subject land to determine the Foreign corporations are corporations formed outside
applicable rate. With the NRST, the existence of single Canada, or corporations formed inside Canada which
family residences on land has become increasingly are controlled in whole or in part by foreign nationals
important, and land that might otherwise have been or by corporations formed outside Canada (a foreign
considered primarily “commercial”: for example, a mixed- corporation that is listed on a Canadian stock exchange
use building that contains a commercial storefront with is exempt). More specifically, the Act defines a “foreign
three residential apartments above the commercial space corporation” as one of the following:
will now be considered, at least for the purposes of the
NRST, to have three single family residences, whether 1. A corporation that is not incorporated in Canada.
or not that land is zoned to permit residential use. So 2. A corporation, the shares of which are not listed on
long as the structure or part of the structure has been a stock exchange in Canada, that is incorporated in

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 8. Non-Resident Speculation Tax: Section 2(2.1) Tax

Canada and is controlled, directly or indirectly in any Payment, Reporting, and Statements
manner whatever, within the meaning of section 256
Since December 30, 2017, payment of NRST has been
of the Income Tax Act (Canada), by one or more of the
following: accepted through the Teraview registration system in the
same manner that payment of LTT is accepted, upon
iii. A foreign national. registration of a transfer. Pre-payment of NRST may
likewise be made in the same manner that prepayment
iv. A corporation that is not incorporated in Canada. of LTT to the Ministry of Finance’s offices in Oshawa,
and NRST is accepted along with the payment of LTT
v. A corporation that would, if each share of the
made in connection with an unregistered disposition of a
corporation’s capital stock that is owned by a
beneficial interest in land.
foreign national or by a corporation described in
paragraph 1 were owned by a particular person, One notable change accompanying the introduction
be controlled, directly or indirectly in any manner of NRST is the inclusion of additional statements to
whatever, within the meaning of section 256 of the be made by the transferee in each registered transfer
Income Tax Act (Canada), by the particular person;68 (or hard-copy affidavit for a paper transfer), and in
the hard-copy return required to be filed along with an
By virtue of reference to section 256 of the Income Tax
unregistered disposition of a beneficial interest in land.
Act one must look not only at the de jure control of the
The transferee must state that he/she/it has considered
corporation but also at the de facto control.
the new definitions and terms related to the NRST in
A taxable trustee is a trustee that is itself a foreign entity the Act, and that the conveyance is either subject to the
or that acts as a trustee for a foreign entity, however NRST or not subject to the NRST. If the conveyance is
trustees acting for the following types of trust are not subject to the NRST then the transferee must state
specifically excluded: mutual fund trusts, real estate why - whether because the land is not in the specified
investment trusts, and SIFT trusts (all as defined in region, is not designated land, or the transferee is not
specified sections of the Income Tax Act).69 There are a foreign entity or taxable trustee. If the transferee is a
certain exemptions for persons who are refugees or fall foreign entity or taxable trustee but is stating that tax
under certain immigration programs. There are also is not payable he/she/it must explain the exemption
certain rebates that may be available for persons who being relied upon. Clients and practitioners alike must
become Canadian citizens or permanent residents, are carefully consider these questions, their responses, and
full-time students, or who work full-time in Ontario for ensure proper documentation is obtained and retained to
certain periods. In each case, the property must have support the answers given.71
been used as the principal residence of the person.70
These definitions are purposefully broad and force
institutional investors who acquire NRST-subject lands on
behalf of others to be particularly careful in determining
who their investors are and to what extent the nature of
their investors will affect the tax payable. Though section
2.1(6) of the Act provides a mechanism for apportioning
the consideration between residential and non-residential
lands, there is no such mechanism for apportioning the
consideration between purchasers of lands, only one of
which might be a foreign entity; the existence of a single
foreign entity will subject the entire consideration paid to
NRST. Furthermore, section 3(4.1) of the Act specifically
provides that all purchasers are jointly and severally liable
for the full amount of the NRST payable relating to the
conveyance.

Ontario and Toronto Land Transfer Tax 19

bennettjones.com
 9. Conclusion

9. Conclusion
Despite being a relatively short piece of legislation flexibility inherent in off-title dispositions, not to mention
focused on a very specific form of taxation, the Act is to the specific rules for affiliate deferrals. Given the host
not as simple as it might first appear. The provisions of of recent changes to the Act, to curb the de minimis
the Act are at times counter-intuitive and often forego exemption, to increase tax rates, and to introduce the
clarity in favour at affording maximum flexibility to the NRST, it seems that LTT disputes and structures will
Ministry. It comes as a surprise to many, for example, become more complex before they become simpler,
that the Land Transfer Tax Act taxes more than just especially if Ontario real estate continues as one of the
transfers of land, including transfers of chattels and driving forces in the provincial economy. Our hope is that
interests in partnerships or trusts that happens to own this paper has provided food for thought and a roadmap
Ontario real estate. Parties also frequently fail to consider of things to consider when structuring transactions and
the specific provisions of section 3 of the Act and the preparing to comply with the Act and its many rules.

Ontario and Toronto Land Transfer Tax 21

Notes
1. Land Transfer Tax Act, RSO 1990, c L6 [Act]; City of Toronto Municipal Code 16. Ontario, Ministry of Finance, “Guide to the Application of the Land Transfer
Chapter 760, Taxation, Municipal Land Transfer Tax (1 February 2008) Tax Act to Certain Transactions”, Bulletin LTT 1-2001 (Published June
[Code]. 2001), online: www.fin.gov.on.ca/en/bulletins/ltt/1_2001.html [Certain
Transactions Guide].
2. For municipal LTT rates see: City of Toronto, online: https://www.toronto.
ca/services-payments/property-taxes-utilities/municipal-land-transfer- 17. Certain Transactions Guide, supra note 18 at s 1.
tax-mltt/municipal-land-transfer-tax-mltt-rates-and-fees/. For provincial
LTT rates see: Ministry of Finance, online: https://www.fin.gov.on.ca/en/ 18. Certain Transactions Guide, supra note 18 at s. 2.
bulletins/ltt/2_2005.html
19. Act, supra note 1, at s 1(1); Consider the inclusion of the words “interest of
3. Act, supra note 1, at s 2(2). an optionee” in the definition of “land”.

4. Act, supra note 1, at s 3(1). 20. Legislation Act, 2006, SO 2006, c 21, Schedule F.

5. Act, supra note 1, at s 3(2). 21. See, for example, Superstars Mississauga Inc. v Ambler-Courtney Ltd., [1993]
OJ No 1871, 15 OR (3d) 437 at para 5.
6. Act, supra note 1, at s 3(3).
22. Unregistered Guide, supra note 15 at part 7.
7. Act, supra note 1, at s 3(2).
23. Ontario, Ministry of Finance, “A Guide for Real Estate Practitioners - Land
8. See: Timing of Tax Payable under Subsection 3(2) of the Act O Reg 343/18 Transfer Tax and the Registration of Conveyances of Land in Ontario”
[Timing Regulation] at s 1(2) and 1(3). (Published June 2010), online: www.fin.gov.on.ca/en/guides/ltt/3250.html
[Registration Guide] at part 3.
9. Act, supra note 1, at s 5(7).
24. Registration Guide, supra note 25.
10. Code, supra note 1, at § 760-42(A).
25. Unregistered Guide, supra note 24 at part 10.
11. Act, supra note 1, at s 5(8); In Ontario, Ministry of Finance, “Land Transfer
Tax “De Minimis” Partnership Exemption: Clarifying Amendments for 26. Act, supra note 1, at s 1(1).
Certain Dispositions”, (Published February 2016), online: www.fin.gov.
on.ca/publication/ltt-deminimis-amendments-en.pdf [De Minimis Bulletin], 27. CSH Aurora Resthaven Inc. v Ontario (Minister of Finance), 2012 ONSC 4376
the Ministry acknowledges its acceptance of this practice under the heading [CSH] at para 13.
“Filing Returns”, specifically stating: “To help facilitate compliance and
in accordance with its usual practice, the ministry accepts returns and 28. 472601 Ontario Ltd. v Ontario (Minister of Revenue), 1987 Carswell Ont 689,
payments made by a partner on behalf of other partners, as well as by 36 DLR (4th) 738, 47 RPR 91; CSH, supra note 29.
trustee(s) on behalf of beneficiaries.”
29. CSH, supra note 29 at paras 15 and 16.
12. Forms available online: www.forms.ssb.gov.on.ca/mbs/ssb/forms/
ssbforms.nsf/GetFileAttach/013-0775E~1/$File/0775E.pdf; Forms available 30. Assaly v Ontario (Minister of Revenue) (1986), 41 RPR 309, 56 OR (2d) 30, 30
online: https://www.toronto.ca/wp-content/uploads/2017/09/8e8d-MLTT- DLR (4th) 291.
Return-Acquistion-Beneficial-Interest-Land-Appln-2015.pdf.
31. OPTrust Amaranth 1 Inc. v Ontario (Minister of Finance), 2016 ONSC 3648
13. For provincial guides see: Ontario, Ministry of Finance, “Land Transfer Tax [OpTrust].
and the Treatment of Unregistered Dispositions of a Beneficial Interest
in Land” (Published May 2006), online: www.fin.gov.on.ca/en/guides/ 32. Optrust, supra note 33 at para 31.
ltt/guidenote1.html [Unregistered Guide]; for municipal guides see: City
of Toronto, “Instructions for Lawyers”, online: https://www.toronto.ca/ 33. Registration Guide, supra note 25 at s 2.
services-payments/property-taxes-utilities/municipal-land-transfer-tax-mltt/
municipal-land-transfer-tax-mltt-resources-for-lawyers/ 34. Act, supra note 1, at s 1(1).

14. Forms available online: http://www.forms.ssb.gov.on.ca/mbs/ssb/forms/ 35. Act, supra note 1, at s 1(1), definition of “value of the consideration”, para
ssbforms.nsf/GetFileAttach/013-10016E~1/$File/10016E.pdf (b) and (b.1).

15. See the following bulletin for additional information: “Quarterly Reporting 36. Ibid.
Periods for Land Transfer Tax on Qualifying Unregistered Dispositions
of a Beneficial Interest in Land” at: https://www.fin.gov.on.ca/en/tax/ltt/
37. Act, supra note 1, at s 1(1), definition of “value of the consideration”, para
(f).
quarterlyreporting.html

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 Notes

38. Act, supra note 1, at s 1(1), definition of “value of the consideration”, para 58. For a discussion of the changes to the De Minimis Regulation and their
(g). retroactive effect, see: Jane C. Helmstadter and Martin A.U. Sorensen,
“Ministry of Finance Ready to Party like it’s 1989: Retroactive Changes to
39. Ibid. Ontario Provincial Land Transfer Tax” (22 February 2016), Bennett Jones
Thought Network (blog), online: blog.bennettjones.com/2016/02/22/
40. See the following for details: Ontario, Ministry of Finance, “Conveyances ministry-of-finance-ready-to-party-like-its-1989-retroactive-changes-to-
Involving Trusts”, Bulletin LTT 1-2005 (Published March 2005), online: ontario-provincial-land-transfer-tax/
www.fin.gov.on.ca/en/bulletins/ltt/1_2005.html
59. De Minimis Bulletin, supra note 13.
41. See the complete description for the text of the affidavit at: Ontario,
Ministry of Finance, “Guide to the Requirements to Evidence NIL Value of 60. Code, supra note 1, at 760-58.
Consideration for Conveyances Involving Trusts - Land Transfer Tax Act”,
(Published April 2004), online: www.fin.gov.on.ca/en/guides/ltt/0693.html. 61. Code, supra note 1, at 760-1.

42. Act, supra note 1, at s 5(7). 62. De Minimis Regulation, supra note 9 at s 1(3).

43. Woodbine Cachet West Inc. v. Ontario (Finance), 2007 ONCA 809. 63. Act, supra note 1, at s 1(1).

44. Ontario, Ministry of Finance, “Transactions for Nominal Consideration”, 64. Act, supra note 1, at s 2.1(2)
Bulletin LTT 10-2000 (Published November 2000), online: www.fin.gov.
on.ca/en/bulletins/ltt/10_2000.html 65. Ibid.

45. Unregistered Guide, supra note 24. 66. Ontario, Ministry of Finance, “Non-Resident Speculation Tax”, (Published
April, 2017), online: https://www.fin.gov.on.ca/en/bulletins/nrst/ [NRST
46. Unregistered Guide, supra note 24. Bulletin]

47. Act, supra note 1, at s 3(9). 67. Act, supra note 1, at s 1(1) and Immigration and Refugee Protection Act, SC
2001 c 27 at s. 2(1).
48. Act, supra note 1, at s 3(11).
68. Act, supra note 1, at s 1(1).
49. Unregistered Guide, supra note 24 at part 6.
69. Act, supra note 1, at s 1(1).
50. Act, supra note 1, at s 3(11).
70. See Tax Payable under Subsection 2(2.1) of the Act by Foreign Entities and
51. Act, supra note 1, at s 3(13.1); Contrast the current legislation with the Taxable Trustees, O Reg 182/17.
decision in 932292 Ontario Inc. v Ontario (Minister of Finance), 1997
Carswell Ont 2418, [1997] OJ No. 2276, 30 OTC 394 (affirmed at the Ontario 71. From a practitioner’s perspective, LawPro recommends reviewing and
Court of Appeal in 932292 Ontario Inc. v Ontario (Minister of Finance), making copies of original and independent source documents, such
1998 Carswell Ont 3578, 82 ACWS (3d) 813), where the court permitted as a passport, birth certificate, permanent resident card, or articles of
an affiliate deferral and tax cancellation using the nominee as the affiliate incorporation. Although it arose in a different context, the recent judgment
transferee through a registered transfer followed by a beneficial disposition. of the Tax Court in the case of Kau v The Queen, 2018 TCC 156, is instructive
This decision is arguably no longer relevant given the provisions of Section on this issue.
13.1 of the Act.

52. Act, supra note 1, at s 3(13.1).

53. 2143569 Ontario Inc v. Ontario (Minister of Revenue), 2014 ONSC 4628, 242
ACWS (3d) 970, 44 RPR (5th) 285.

54. 214, supra, at para 16.

55. 214, supra, at para 18.

56. De Minimis Regulation, supra note 9 at s 1(3).

57. Exemptions From Tax Under Section 3 of the Act O Reg 70/91 as it appeared
on 17 February 2016 at s 1(2).

Ontario and Toronto Land Transfer Tax 23

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Authors
Jane Helmstadter Craig Garbe
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