Tax payable on transfer
By operation of The Tax Administration and Miscellaneous Taxes Act, land transfer tax is payable upon registration of a transfer of land (unless the conveyance is exempted by that Act). The amount of tax to be paid depends upon the fair market value of the land.
Fair market value means
Fair market value means the value of the land being transferred, including all improvements and buildings, at the time a transfer of land is registered at land titles. Typically, this will be amount paid by a knowledgeable and willing buyer to a knowledgeable and willing seller where the parties are unconnected and equally motivated.
Fair market value does not mean
• The value of the lands at the time the transfer was signed.
• The value of the lands at the time the parties agreed to buy and sell the lands.
• The value of the lands at the time the offer to purchase was signed.
• The value of the lands at the time the evidence as to value in the transfer form was signed.
• The amount that was paid for the lands where that amount is less than the true fair market value of the lands.
Improvements made prior to registration of transfer
Parties who are considering making improvements to a piece of property prior to filing a transfer of land should be aware of the fact that any improvements they make will affect the value of the subject lands and therefore the amount of tax they will be required to pay.
Evidence must be current
The district registrar will not accept a transfer of land where the sworn fair market value is more than six months old. This does not mean that parties can register transfers of land containing fair market value evidence that is not correct just because it was correct when it was signed, and the six-month time period has not passed - it is the value of the land at the time the transfer is registered that is the relevant value!
It is completely inappropriate to file a transfer which contains a value that does not reflect the fair market value of that property as of the filing date even if that information was correct at some point in time in the past.
Exemptions from land transfer tax
In certain circumstances, transferees are exempt from paying land transfer tax. There are numerous circumstances when this tax may not be payable. The smart eTransfer provides relevant options based upon the nature of the transferee selected.
Pursuant to The Tax Administration and Miscellaneous Taxes Act (TAMTA), tax may not be payable where:
• The value of the land transferred is less than $ 30,000.00
• The transferor is the director of The Veteran Lands Act and the transferee is a veteran or the spouse of a veteran or the common-law partner of a veteran
• The land is farmland, the transferee is a farmer, a spouse or common-law partner of a farmer, or a farmer and the farmer’s spouse or common-law partner, and the land will continue to be used for farming
o Section 111(2) of TAMTA sets out “farmer” has the same meaning as in The Farm Lands Ownership Act and pursuant to that Act and The Farm Lands Ownership Regulations in order to qualify as a farmer a person must earn 50% or more of their gross income from their occupation of farming and spend at least 40% of their working time actively engaged in farming
• A retired farmer is not a farmer as defined by the legislation and therefore not entitled to this exemption.
• The land is farmland, the transferee is a family farm corporation and the land will continue to be used for farming
o Section 111(2) of TAMTA sets out “farmer” has the same meaning as in The Farm Lands Ownership Act and pursuant to that Act and The Farm Lands Ownership Regulations in order to qualify as a farmer a person must earn 50% or more of their gross income from their occupation of farming and spend at least 40% of their working time actively engaged in farming
• The land is farmland, the transferee is congregation within the meaning of section 143 of The Income Tax Act (Canada) and the land will continue to be used for farming
• The transferee is a registered charity as defined in The Income Tax Act of Canada
• The transfer is filed to correct an error in a previous transfer
• The transfer is to facilitate a scheme of subdivision to or from a trustee where there is no change of beneficial ownership
• The transfer is to change the type of tenure as between the existing owners of the land in question
• The transfer is a transfer of non-commercial property and the transferee is the registered owner’s spouse or common-law partner (within the meaning of section 114 (1) (e) of The Tax Administration and Miscellaneous Taxes Act) or former spouse or former common-law partner or the executors/administrators of the registered owner’s spouse or common-law partner
• The transfer is from a company which has dissolved and is to the company which held all of its shares immediately prior to dissolution
• The transferee is acquiring the land for the use and benefit of an Indian band for treaty land entitlement purposes pursuant to s. 113(3) of The Tax Administration and Miscellaneous Taxes Act.
• The transferee is a non-profit corporation that is controlled by the transferor which is a registered charity as defined in s. 248(1) of the Income Tax Act.
See also Estates for issues regarding transfers by the executors/administrators of an estate.
See Witnessing rules for the rules governing the witnessing of transfers.