Effective February 18, 2016, the Ontario Government enacted “clarifying” amendments (the “Amendments”) to Ontario Regulation 70/91 under the Land Transfer Tax Act (the “Act”) to stop the perceived abuse of a de minimis partnership exemption from land transfer tax in respect of certain unregistered transfers of a beneficial interest in land situated in Ontario. The Amendments apply retroactively almost 27 years, to dispositions of beneficial interests in land occurring on or after July 19, 1989.

Our prior Cassels Brock e-Lert in respect of the matter can be viewed here.

The Amendments raised numerous questions regarding compliance obligations and future assessing practices of the Ministry of Finance. The Ministry of Finance released a publication providing the following update to facilitate compliance.

Assessment/Reassessment period

For dispositions of a beneficial interest in land through one or more partnerships, the Minister will assess and/or reassess only dispositions that occurred on or after February 18, 2012.

Prosecutions

For dispositions of a beneficial interest in land through one or more partnerships that occurred prior to February 18, 2016, the Ministry will not initiate prosecutions under the Act.

Special Voluntary Disclosure Policy (SVDP)

A special, time-limited, voluntary disclosure policy (SVDP) will be available only with respect to dispositions of a beneficial interest in land through one or more partnerships. The SVDP will apply only to dispositions that occurred on or before February 17, 2016.

In general, the requirements of the SVDP will be the same as the Ministry’s general voluntary disclosure policy (VDP), as set out in the Ministry’s Voluntary Disclosure bulletin (with certain exceptions set out below). For further information about the general VDP, please refer to this link.

Like the general VDP, provided that the program requirements are met, the Ministry will not assess penalties in respect of the dispositions reported in the disclosure. In addition, it is proposed that under the SVDP:

  • Interest will not apply from the time of the disposition up to December 31, 2016.
  • The Ministry will issue an acceptance letter upon verifying that the disclosure is valid and program requirements are met.

The SVDP will be time limited. The disclosure must be made on or before December 31, 2016.

Full payment will be expected upon disclosure. Where the whole amount owing cannot be paid immediately, the Ministry may consider reasonable payment arrangements.

Dispositions disclosed under the SVDP will generally be subject to the assessment/reassessment period in the Act.

For dispositions that are not eligible for the SVDP, or that do not meet the deadline for the SVDP, the Ministry’s general VDP will continue to apply.

Extension of time for returns (Dispositions on or after February 18, 2016)

For dispositions of a beneficial interest in land through one or more partnerships, returns and remittances for dispositions that occurred on or after February 18, 2016 will be due the later of the thirtieth day after the date of the disposition and January 1, 2017. Interest will not start to accrue for these transactions until January 1, 2017.

Filing returns

To help facilitate compliance and in accordance with its usual practice, the Ministry will accept returns and payments made by a partner on behalf of other partners, as well as by trustee(s) on behalf of beneficiaries.

Comments

The foregoing policies are welcome clarifications and guidance.  Funds subject to the Amendments will have to consider whether to take advantage of the SVDP, and the implications of the Amendments for their financial statements if steps are not taken to pay the liability on a timely basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.