Ontario Tax Bulletin LTT 8-2000, June 2000

This bulletin is relevant to conveyances of land which occurred on or after March 1, 2000 and prior to March 9, 2005. On March 9, 2005, the Spousal Relationships Statute Law Amendment Act, 2005 received Royal Assent; a new definition of "spouse" came into effect and the term "same-sex partners" was removed from many of Ontario's statutes.

The Land Transfer Tax Act ("Act") was amended to now include provisions relating to same-sex partners. These amendments were effective March 1, 2000.

In the Act, the definition of "same-sex partner" is the same as the definition of same-sex partner in section 29 of the Family Law Act*.

Affidavit of Residence and of Value of the Consideration:

Subsection 5(2) of the Act has been amended to allow either of same-sex partners (where both are transferees on a conveyance of land) to make the Affidavit of Residence and of Value of the Consideration, where the one transferee is making the affidavit on behalf of him/herself and the other transferee.

• Until a revised Affidavit of Residence and of Value of the Consideration is introduced incorporating these amendments, the Land Registry Offices will accept the current form completed by a transferee on behalf of him/herself and his/her same-sex partner. The same-sex partner making the affidavit will mark clause (c) in paragraph 1 of the affidavit and should state the following in paragraph 7:
  
  "I am a transferee making this affidavit on behalf of myself and my same-sex partner (insert name of same-sex partner), as defined in Section 29 of the Family Law Act, each of us being a transferee named in clause 1(c)."
  
  * Questions related to the Family Law Act should be addressed to the Ministry of the Attorney General. Their general inquiry number is 416 326-2220.

Refunds for First Time Purchasers of Newly-Constructed Homes:

The definition of "purchaser" in subsection 9.2(1) of the Act has been expanded for the purpose of the refund to first time purchasers of newly-constructed homes. The expanded definition of "purchaser" now requires that the individual's same-sex partner has not owned an eligible home anywhere in the world, while he or she was a same-sex partner of the individual. An individual whose same-sex partner owned an eligible home while he or she was a same-sex partner of the individual, is not a first time purchaser and therefore is not eligible for the refund.

• Subsection 9.2(3) now allows a first time purchaser of a newly constructed home to claim a refund of the land transfer tax in proportion to the interest in land acquired by him/herself, plus the interest acquired by his/her same-sex partner (who previously owned an eligible home but disposed of it prior to the time he or she became the same-sex partner of the purchaser).
• A first time purchaser, purchasing a newly constructed home with his/her same-sex partner (who is not a first time purchaser but disposed of his/her former eligible home prior to the time he or she became the same-sex partner of the purchaser), is eligible for a refund of 100% of Land Transfer Tax to a maximum refund amount. In order for the first time purchaser to claim on behalf of both same-sex partners, the "Spousal or Same-Sex Partners Declaration" on the Land Transfer Tax Refund Affidavit must be signed by the first time purchaser and the same-sex partner.

Family Business/Family Farm Exemption:

Regulation 697, R.R.O. 1990, has been amended to allow the exemption from tax under certain conditions for a conveyance from an individual or individuals (each of whom is a member of the family or same-sex partner of the other) to a family business corporation or family farm corporation where all the shareholders are members of the family or a same-sex partner of the individual or individuals.

Employee Relocation Plans:

Regulation 71/91 which provides for an exemption from tax for unregistered dispositions of land by an employee to an employer under certain conditions has been amended so that any reference to "spouse" is now changed to "spouse or same-sex partner".

Exemption for Transfers of Land Between Spouses or Same-Sex Partners:

Regulation 696, R.R.O. 1990, now provides for an exemption from land transfer tax in the case of certain transfers of land between spouses or same-sex partners.

Section 1 of the regulation reads as follows;

"It is determined that the Act was not intended to apply on the tender for registration of any conveyance where the transferor is the spouse, same-sex partner or former spouse or same-sex partner of the transferee and where sufficient information is provided to enable the Minister or any collector to whom the conveyance is tendered for registration to determine that one of the following conditions is satisfied:

1. the only consideration given for the conveyance apart from natural love and affection is the assumption of any encumbrance registered on the land described in the conveyance;
2. the conveyance is in compliance with the terms of a written agreement pursuant to which the parties have agreed to live separate and apart; or
3. the conveyance is in compliance with the direction of an order or judgement made by a court of competent jurisdiction."

As specified in the regulation, one of (1), (2) or (3) conditions must apply in order for the transaction to be exempt from tax. Therefore if the conveyance is between spouses and there is consideration passing other than the assumption of encumbrances and there is no written separation agreement or court order, then tax is payable on the total consideration passing, including the mortgage being assumed by the transferee.

To claim the exemption, the total consideration passing for the transaction must be shown in paragraph 4 of the Affidavit of Residence and of Value of the Consideration and one of the following explanations (whichever is applicable) should be set out in paragraph 7 of that affidavit:

1. This is a transfer between spouses (or same-sex partners or former spouses or former same-sex-partners) and the only consideration passing is the assumption of the encumbrance(s) therefore the transaction is exempt from tax pursuant to Regulation 696, R.R.O. 1990.
2. This is a transfer between spouses (or same-sex partners or former spouses or former same-sex-partners) and the conveyance is pursuant to a written separation agreement therefore the transaction is exempt from tax pursuant to Regulation 696, R.R.O. 1990.
3. This is a transfer between spouses (or same-sex partners or former spouses or former same-sex partners) and the conveyance is pursuant to a court order therefore the transaction is exempt from tax pursuant to Regulation 696, R.R.O. 1990.

NOTE This exemption also applies to unregistered dispositions described in subsection 3(1) of the Act. In those cases, a return must be filed and the exemption claimed. Regulation 70/91 has been amended to allow for this exemption on dispositions between same-sex partners.

Please contact the Land Resources and Taxes section of the Tax Compliance Branch for further information on any of the above situations.

You may write to:
Ministry of Revenue
Tax Compliance Branch
Land Resources and Taxes section
P. O. Box 625
33 King Street West
Oshawa, Ontario
L1H 8H9
FAX: 905 433-5770
or call toll-free 1 866 ONT-TAXS (1 866 668-8297)