CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
1.5 Taxation of Real Estate Owned by Non- Residents and Non-Citizens Non-citizens and non-residents who purchase real property in Ontario must pay a 25% non-resident speculation tax (NRST). Agricultural land and com - mercial property are exempt, as are transfers of prop - erty to foreign spouses of Canadian citizens and cer - tain foreign nationals. A rebate of the NRST may be available if the purchaser becomes a permanent resi - dent within four years, or is a foreign national work - ing in Ontario. As of 1 January 2025, a 10% NRST also applies to the purchase of residential properties in Toronto. In specific regions of British Columbia, including Vancouver, an NRST of 20% is payable. Nova Sco - tia also imposes a 10% non-resident deed transfer tax, increased from 5% effective 1 April 2025, which applies to residential property if the purchaser does not move to the province within six months. As of 1 January 2023, non-citizens and non-residents may not purchase residential property in Canadian metropolitan areas until 1 January 2027, although there are exceptions for temporary residents, work permit holders, refugees, and non-Canadian spouses and common-law partners. The prohibition does not apply to vacant land. The federal government imposed a 1% nationwide tax on vacant property owned by non-resident non-Cana - dians from 2022 to 2024, but this tax was eliminated in 2025. However, British Columbia continues to impose a speculation and vacancy tax of 2%. 1.6 Stability of Tax Laws Income Tax The overarching tax legislation in Canada is the Income Tax Act, which has been in force since 1 Janu - ary 1949. While the Income Tax Act appears to be permanent, Canadian tax law is amended regularly through the federal budget and other bills. Common Practices to Limit Tax Payable on Death Practices that reduce or avoid estate administration taxes are a common feature of estate planning in Canada.
Multiple wills In order to avoid the payment of probate fees on all assets included in one’s estate plan, many clients will use multiple wills. A primary will addresses the dis - tribution of real property and potentially other assets requiring probate, whereas a secondary will addresses the distribution of all other assets. A tertiary will may also be used to deal with corporate interests. The authority of an estate trustee named in multiple wills to distribute assets under a will not admitted to probate will typically be recognised if the trustee has obtained a grant of probate for one of the other wills. Joint ownership Another common mechanism for transferring assets without exposing an estate to probate fees is joint ownership. Assets held jointly will pass by right of sur - vivorship to a surviving joint owner. When an estate plan includes joint ownership, it is important that the testator’s intention to gift the ben - eficial interest to the joint owner is clearly expressed. If assets pass to the testator’s adult child by right of survivorship, they are presumed to be held on a result - ing trust in favour of the estate under the common law, unless there is evidence of an intention to gift the beneficial interest to the survivor. Beneficiary designations Beneficiary designations allow certain assets to “pass outside” an estate to the intended beneficiary, with - out being distributed under a testamentary document requiring probate. Life insurance policies, tax-free savings accounts and RRSPs are commonly trans - ferred using beneficiary designations. Tax benefits may arise where a married or common-law spouse is named as the designated beneficiary of a registered savings plan. 1.7 Transparency and Increased Global Reporting Canada is part of the growing list of countries that have entered into the Foreign Account Tax Compli - ance Act Intergovernmental Agreement (FATCA IGA), designed to increase disclosure by foreign tax authori - ties to the US Internal Revenue Service (IRS). Cur - rently, the FATCA IGA relieves the CRA from direct
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