Land Transfer Tax Act

Table of Contents

Land Transfer Tax Act
Subsection 1(1)
Convey
Administrative Policy(1)
Value of the Consideration
Cases(3)
Subsection 2(1)
Commentary
Administrative Policy(4)
Forms
Related Provisions
Subsection 2(6)
Administrative Policy(1)
Subsection 3(1)
Cases(1)
Administrative Policy(1)
Forms
Paragraph 3(9)(c)
Administrative Policy(1)
Forms
Paragraph 3(11)(a)
Cases(1)
Subsection 3(12)
Administrative Policy(1)

Subsection 1(1)

Convey

Administrative Policy

LTT-3 "Transfers Involving Corporations"

Where, by virtue of a statutory amalgamation, the land or lands of two or more companies become vested in the company resulting from the amalgamation, such conveyance of land is not interpreted by the Ministry of Finance as a conveyance of land within the meaning of section 1 of the Act and, as a result, no tax is payable on these transactions. Also, any unregistered transfers of land that result from a statutory amalgamation are not dispositions under section 3 of the Act.

Value of the Consideration

Cases

Toronto-Dominion Bank v. Minister of Revenue of Ontario, [1994] OJ No. 897

(f) not engaged where fee owner transferred beneficial ownership then registered title

A wholly-owned subsidiary ("Realty") of the Toronto-Dominion Bank (the "Bank") was dissolved and in connection with that dissolution, Realty directed that land which it previously had owned in fee simple be conveyed to the Bank which, in turn, directed that legal title be held by Realty as bare trustee. Realty, the Bank and another wholly-owned subsidiary of the Bank ("Penlim") agreed that thereafter the legal interest in the property would be transferred from Realty to Penlim to be held by Penlim as bare trustee for the Bank. The Bank applied to the Court for direction as to whether such transfer of legal title to the Bank would trigger land transfer tax under paragraph (f) of the definition of value of consideration.

Feldman J. found that "a person who owns land in fee simple holds the entire title and is prima facie not a trustee". Accordingly, the analysis of the Minister, that when Realty held the land in fee simple it held both the equitable and legal interest in the land, represented a strained interpretation of the definition, and should not be accepted. The transfer of the legal interest in the land to Penlim would not attract land transfer tax.

Re 472601 Ontario Ltd. and Minister of Revenue (1987), 59 OR (2d) 25 (HCJ)

The appellant entered into an agreement to purchase real property for a stipulated purchase price of approximately $7.0 million, with the purchase price being stated to include the provision of services by a third party pursuant to a separate services agreement which indicated that the value of such services was approximately $3.3 million. Given that the parties clearly specified that the value of the services was included in the consideration for the sale, such value was included in the "value of the consideration".

Re Assaly and Minister of Revenue (1986), 56 OR (2d) 30 (HCJ)

A corporation owned by the appellant entered into an agreement with him in 1981 to sell vacant land to him for a purchase price of $185,000 with the agreement of purchase and sale being conditional upon the appellant and the corporation entering into a building contract under which the corporation would construct condominium units on the land. The transfer was registered in 1983 after building work had been completed.

Although the gross sale price for the conveyance was $185,000, the building contract constituted "part of the arrangement relating to the conveyance" and by virtue of the building contract arrangement a liability was assumed by the appellant as part of that arrangement. McKinlay J. noted that the Oxford English Dictionary defined "arrangement" as "a structure or combination of things for a purpose". Consequently, the total "value of the consideration" was $2,142,700 (i.e., including such liability).

Words and Phrases
relating to arrangement

Subsection 2(1)

Commentary

The chart below provides a general comparison of the Ontario land transfer tax regime with that of the other nine provinces.

Prov. Legislation Basis of tax or fee Basic rate Exemption
BC Property Transfer Tax Act Fee on registration of a "taxable transaction" (including a disposition of a lease and a name change application in respect of an amalgamation) 1% of first $200,000 of fair market value;

2% on excess

 No tax on
  • mortgages
  • leases where remaining term including extensions is under 30 years
  • registration of name change (under s. 191(1) or (3) on Form 17) following conventional Canadian amalgamations (e.g. under BCBCA, CBCA, OBCA)(PTT 012) is exempted under s. 14(4)(u) – it is typical to file Forms 17 and Property Tax Returns (but with no tax) for all fee simple properties following amalgamation
AB Land Titles Act [Land Titles Fees Registration] Prescribed fee on registration of
  • transfers, notifications and leasehold titles
  • mortgages and encumbrances
  • other
 Transfers and leasehold interests: $50 plus $1.00 per each $5,000 of property value (with leaseholds valued at 5% of the FMV for each remaining year of term - up to FMV including where there is a filing of a leasehold caveat)

Mortgages: $50 plus $1.00 for each $1,000 of principal amount

 Fee for other changes in registered ownership (including notice of amalgamation) is $15)
SK Land Titles Act, 2000 ISC Land Titles Fees Prescribed fee for transfers or other title updates 0% on first $500 of property value,

$25 on excess to $8,400;

0.3% on excess

 No fee or tax on filing certificate of amalgamation on title
MB Tax Administration and Miscellaneous Taxes Act, Part III Tax on tender for registration of a transfer 0% on first $30,000 of FMV

0.5% on next $60,000

1.0 % on next $60,000

1.5% on next $50,000

2.0% on excess over $200,000

 No tax on:
  • mortgages
  • leases
  • transfers on winding up of wholly owned subsidiary
  • Modest fee for updating name of amalgamated title holder based on certificate of amalgamation filed with Registry
ON Land Transfer Tax Act Tax on
  • tender for registration of a conveyance
  • tender for registration of a notice signifying the existence of an unregistered conveyance
  • unregistered disposition of a beneficial interest in land
 0.5% on first $55,000 of value of considerations;1.0% on next $195,000;1.5% on over $250,000

Plus additional 0.5% tax on property with one or two family dwellings to extent the consideration exceeds $400,000

 No tax on:
  • mortgages
  • leases with remaining term including extensions or renewals provided for in the lese or related documents of under 50 years
  • transfer to nominee for nil consideration if no relevant previous beneficial transfers
  • transfers on amalgamations (LTT-3)

Exemptions for unregistered dispositions:

  • de minimis partnership transactions (5% increment per year)
  • transfer or issuance of mutual fund units
  • transfers between affiliated corporations (if timely deferral application and no subsequent registration in group (s. 3(13.1)))
  • butterfly reorganizations
  • employee relocation plans
TOR City of Toronto By-Law 1423-2007 City of Toronto imposes a tax (over and above Ontario tax) on the same base as Ontario 0.5% on first $55,000 of value of consideration;1.0% on next $345,000;1.5% on next $29,600,000;1.0% on excess over $40 million;

Plus an additional 0.5% on property with one or two family dwellings to extent the consideration exceeds $400,000 (or instead an additional 1.0% to the extent exceeding $40 million)

 Same as Ontario
QC Act Respecting Duties on Transfers of Immovables Municipalities are obliged to levy their own duties on the transfer of an immovableDuties are collected on the registration of a deed of transferTechnical concern that tax theoretically payable on unregistered transfers could become payable later on an unrelated registration for same immovable, but this doesn't happen in practice Calculated on the "basis of imposition:" the greatest of:
  • consideration furnished;
  • price in deed;
  • and escalated municipal roll value:
    • 0.5% of basis of imposition up to $50,000
    • 1.0% on the next $200,000
    • 1.5% of excess
 No tax on
  • mortgages
  • leases with an unexpired term including renewals/extensions mentioned therein of not more than 40 years (s. 1, "transfer")

Exemptions for

  • transfers between closely related (at least 90% common ownership) persons if 2-year hold (ss. 19(d), 19.1, TA, s. 1129.29)
  • transfers on amalgamation (s. 19(c))
NB Real Property Transfer Tax Act Tax on tender of a deed for registration 0.50% of greater of consideration for the transfer and the assessed value of the property No tax on
  • mortgages (s. 1-"deed," 6(m)))
  • leases with a term of under 25 years (s. 6(b))
  • registration of declaration of amalgamation

No exemptions for transfers between related corporations
NS Municipal Government Act (more readable pdf) "Deed transfer tax" on a registered or unregistered instrument whereby land is transferred – however, there likely is no triggering mechanism for payment if no registration (s. 101(1)) The rates applied to the sale price (s. 102(2)) are set by each municipality (e.g. 1.5% for Halifax and 1.0% for New Glasgow) but may not exceed 1.5% of the "value of the property" (s. 102(1)). No tax on
  • mortgages
  • leases with unexpired term of 21 years excluding renewals (s. 3(t))
  • No tax on changing the registered name reflecting an amalgamation
PEI Real Property Transfer Tax Act (see also Lands Protection Act) Tax is triggered only on an acquisition by deed (s. 3(1)) 1% of the greater of the consideration for the transfer and assessed value No payment for mortgages given to banks, trust companies and other financial institutions acting in the ordinary course of businessRegistered transfers between wholly-owned corporations are exempted.No tax on registration on title of notice of an amalgamation.
NFLD Registration of Deeds Act, 2009 Prescribed fees on the registration of
  • a conveyance, assignment, or other documents (including a leases)
  • a mortgage, etc.
 Conveyance or assignment:
  • $100 plus 0.4%
  • flat $100 for assignment of lease

Mortgage:

  • $100 plus 0.4% of the value of the mortgage in excess of $500
 No tax on registration of declaration attesting to amalgamation (other than $100 fee)

Administrative Policy

Bulletin LTT 10-2000 "Transactions for Nominal Consideration" November 2000

Partitioning of a Co-tenancy

Where a partitioning of land takes place and each or any of the "co-tenants" receives land equal in value to their original interest in the whole parcel, no tax will be payable. This applies where one parcel of land is partitioned, i.e. that the partitioned lands are contiguous. ...

Dissolution of a Partnership

...[P]artnerships are treated as tenancies in common for purposes of the tax. Where a dissolution of a partnership that owns land takes place and each or any of the partners receives land equal in value to their original interest in the whole parcel, no tax will be payable. This applies where one parcel of land is distributed among the partners, i.e. that the distributed lands are contiguous.

A Guide for Real Estate Practitioners - Land Transfer Tax and the Registration of Conveyances of Land in Ontario July 2003

Forms

Land Transfer Tax Affidavit

Related Provisions

City of Toronto By-Law 1423-2007

§ 760-9. Amount. Every person who tenders for registration a conveyance by which any land is conveyed to or in trust for a transferee shall pay to the Chief Financial Officer, when the conveyance is tendered for registration or before it is tendered for registration:

A. a tax computed at the rate of:

  • (1) one-half of 1 percent of the value of the consideration for the conveyance up to and including $55,000;
  • (2) 1 percent of the value of the consideration which exceeds $55,000 up to and including $400,000;
  • (3) 1.5 percent of the value of the consideration which exceeds $400,000 up to and including $40 million;
  • (4) 1 percent of the value of the consideration which exceeds $40 million;

B. if the value of the consideration for the conveyance exceeds $400,000 and the conveyance is a conveyance of land that contains at least one and not more than two single family residences, an additional tax of:

  • (1) one-half of 1 percent of the amount by which the value of the consideration exceeds $400,000 up to and including $40 million; and
  • (2) 1 percent of the amount by which the value of the consideration exceeds$40 million.

Subsection 2(6)

Administrative Policy

Bulletin LTT 6-2000 "Leases and the Land Transfer Tax Act" June 2000

Regulation 700, RRO 1990 provides ...[that] in the case of a surrender or notice of surrender of the rights of a lessee under a lease or a sublease to the person entitled to the reversion of such lease or sublease, when the term of that lease (including any renewals or extensions) can exceed 50 years, the consideration is reduced to the actual consideration passing (or to zero if there is no consideration passing).

Subsection 3(1)

Cases

Upper Valley Dodge Chrysler Ltd. v. Minister of Finance (2003), 67 OR (3d) 196 (Sup Ct J), aff'd (2005), 73 OR (3d) 146 (Sup Ct J Div Ct)

The transfer of land by an individual to a corporation which had been using the land in its car dealership business was an exempt transaction notwithstanding the requirement in s. 3(1) that prior to the transfer the land had been used "predominantly in the operation of an active business which was operated exclusively by an individual". Although prior to the transfer the business was owned by the corporation, that business was operated by the individual due to his effective control of the business. Furthermore, the word "individual" should be interpreted to include a corporation given that there is no relevant statutory definition of this term.

Administrative Policy

Land Transfer Tax and the Treatment of Unregistered Dispositions of a Beneficial Interest in Land May 2006

Forms

Return on an Acquisition of a Beneficial Interest in Land (Ontario)

Return on the Acquisition of a Beneficial Interest in Land/Application and Undertaking for the Deferral of Municipal Land Transfer Tax (Toronto)

Paragraph 3(9)(c)

Administrative Policy

Land Transfer Tax and the Treatment of Unregistered Dispositions of a Beneficial Interest in Land May 2006

Clause (c) involves cases in which the beneficial interest in the land leaves the corporate circle of affiliated corporations and is acquired by a non-related third party. Provided the tax payable is paid on the acquisition by that third party, the corporation or corporations which had received a deferral may have their undertakings shortened and their deferred tax cancelled.

Forms

Application and Undertaking for the Deferral of Tax Pursuant to Subsection 3(9)

Paragraph 3(11)(a)

Cases

2143569 Ontario Inc. v. Minister of Revenue, 2014 ONSC 4628

recital of ultimate beneficial owner does not evidence "the" disposition to that owner

A corporation holding both legal and beneficial ownership of an Ontario property ("Your Host") transferred registered title pursuant to a trust agreement with its parent ("McIntosh Holdings"). A week later (on 12 September 2007), Your Host transferred beneficial ownership to the appellant. The appellant then applied for deferral under ss. 3(9) and (11) of the LTTA. A year later, the City of Niagara Falls registered a development agreement on title, which recited that McIntosh Holdings held title on behalf of the appellant.

In rejecting the position of the Minister that cancellation of the deferred tax was not available by virtue of s. 3(9)(c) and 3(11)(a) because the development agreement was an instrument evidencing the disposition of the beneficial interest, Lofchik J stated (at para. 18):

Evidence of "the" disposition would at the very least have to identify the entity disposing of the property (Your Host) and the entity benefitting from the disposition (2143569 Ontario Ltd.). The recital… does not accomplish this.

Subsection 3(12)

Administrative Policy

Land Transfer Tax and the Treatment of Unregistered Dispositions of a Beneficial Interest in Land May 2006

A similar situation results without the assistance of subsection 3(12) in the case of corporations which amalgamate through statutory amalgamation. In the ministry's view, for land transfer tax purposes, the amalgamated corporation is a continuation of the corporations which have been amalgamated. As a result, the corporations which have been amalgamated, if they were affiliates immediately before and at the time of amalgamation, will always be affiliates following the amalgamation.

Tax Topics