In the new year, key pieces of legislation will come into play that may impact everyone from cottage owners to environmental advocates. Here’s a rundown of what to expect.
Non-Resident Speculation Tax
What it entails: Also called the Foreign Buyers tax, the NRST has existed since 2017 and applies to non-residents purchasing property in Ontario. In October 2022, the provincial government bumped it up from 20 to 25 per cent.
Who is impacted: Non-residents (outside of Canada) buying property in Ontario; it’s relevant to the second home/vacation property market.
Issues and concerns: Some real-estate experts are concerned it may deter tourism dollars that contribute to local economies, especially in vacation regions close to the U.S.
When: The increase from 20 to 25 per cent happened in October, but if you purchased property before that date, you’ll still pay the 20 per cent rate when taxes are due in 2023. Any property purchased after October 25 of this year will fall under the 25 per cent rate.
What it entails: The Ontario government has said they plan to build 1.5 million homes over the next 10 years. There are many stipulations in Bill 23, such as waiving the need to apply for re-zoning permits if you want to alter or add to an existing unit.
Who it impacts: Current or prospective homeowners, developers, and in particular, those who live in cottage country and/or in close proximity to conservation areas.
Issues and concerns: Some conservation authorities are concerned the bill will strip away their ability to advocate for environmentally sensitive regions and areas at risk for flooding.
When: Bill 23 was made law on November 28, but some portions of it are expected to come into effect early in the new year, as announced by the province’s Lieutenant Governor. Public consultation for the proposed regulation of conservation authorities closed on December 30.
What it entails: This bill amends five major pieces of existing legislation regarding infrastructure. Since local municipalities handle most building processes, this act aims to remove barriers (the cities of Toronto and Ottawa have detailed information on the bill).
Who it impacts: Developers or home builders; those looking to change, add onto or renovate their home. Since this bill is looped in with Bill 23, it’s also of interest to cottagers and those near conservation areas.
Issues and concerns: With the similar desire to strip away “red tape” as in Bill 23, the same concerns have been raised about inadvertent harm to the environment, especially ecologically sensitive areas.
When: The bill took effect on Jan. 1, 2023
What it entails: This bill gives the mayors of Toronto and Ottawa increased power. It will see those mayors able to move forward on some initiatives with only one-third of councillors on board, as opposed to the previous requirement of a majority (it specifically targets infrastructure).
Who it impacts: Residents of both Toronto and Ottawa and surrounding areas, home builders, developers, and prospective buyers.
Issues and controversies: Some city councillors have expressed concern that this bill would give sweeping powers to mayors to pass bills that would usually require more support. The Association of Municipalities of Ontario has spoken out against the bill, echoing similar concerns.
When: The bill technically passed on December 8, but further consultations and any material use of it is not expected until the new year.
Underused Housing Tax
What it entails: This tax targets housing considered to be “underused” stands at one per cent of the total value of the property and applies to non-resident, non-Canadian-owned property. While this tax was brought forth at the end of 2021, the deadline to file and pay it is April 2023—for the year 2022—which is why it’s relevant now.
Who it impacts: Anyone who is a non-resident, non-Canadian owner of a property considered underused or vacant housing. It may be relevant to owners in cottage country/vacation regions; depending on several factors, properties there may fall into that category (the consulting firm Ernst & Young provides a thorough explainer here).
Issues and concerns: Similar to the non-resident tax, some financial experts have expressed concern that this will deter foreign buyers from investing in Canada and bringing in tourism dollars.
When: Anyone who needs to pay the tax will have to do so by April 23, 2023, for the 2022 calendar year.
Prohibition on the Purchase of Residential Property by Non-Canadians Act
What it entails: The federal government has banned foreign buyers and corporations from purchasing specific residential property in Canada for the next two years, with some exceptions. This does not apply to residential property located within municipalities with a core population of less than 10,000 people.
Any non-Canadian or anyone who knowingly assists a non-Canadian and is convicted of violating the Act faces a fine of $10,000, and they may be forced to sell the property.
Who it impacts: Foreign citizens without a permanent resident card and corporations controlled by foreign individuals or entities. Recreational properties are not included in the ban and neither are some cottage country areas.
Issues and controversies: CREA has criticized the bill saying it will hinder Canada’s ability to attract foreign talent to its labour force.
When: The ban took effect on Jan. 1, 2023.
This article includes amendments by Megan McPhaden.