Buy the premises along with the business and Ontario taxes the buyer. Land Transfer Tax Act section 2(1) charges tax when a conveyance is tendered for registration, computed on the value of the consideration and reaching 2 per cent above $400,000. Buy the shares of the company that already owns the building and no conveyance occurs, so ordinarily no tax is payable.
Key takeaways
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Section 2(1), marginal note Tax, is the charging provision: “Every person who, on or after January 1, 2017, tenders for registration in Ontario a conveyance by which any land is conveyed to or in trust for a transferee shall pay when the conveyance is tendered for registration or before it is tendered for registration” tax at the rates that follow. The taxable event is registration, not closing.
Section 1(1) defines “convey” to include “agreeing to sell land in Ontario, or the giving of an option upon or with respect to any land in Ontario”, and the Ministry draws the consequence in Bulletin LTT 1-2001: “an agreement of purchase and sale or any related notice or caution is a taxable conveyance when tendered for registration”. Nothing shifts the cost to the vendor: who pays.
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Not registering does not escape the Act. Section 3, marginal note Disposition of beneficial interest in land, provides at subsection (2) that “tax at the rates otherwise determined under section 2 is payable to the Minister on the thirtieth day after the date of the disposition as if the disposition were a conveyance of land tendered for registration”.
The acquirer pays and files: subsection (3) makes the tax “payable by every person who acquires a beneficial interest in land”, and section 5(7) requires a return by the day it falls due — the Ministry’s overview names the form. Subsection (5) switches section 3 off where the instrument is registered inside 30 days and the tax paid, so the charges never stack: unregistered transfers.
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The base is not the headline price. Clause (a) of the section 1(1) definition captures “the gross sale price or the amount expressed in money of any consideration given or to be given for the conveyance” and, on top of it, “the value expressed in money of any liability assumed or undertaken by or on behalf of the transferee as part of the arrangement relating to the conveyance”.
The Ministry’s guidance lists what that captures — “liabilities assumed, benefits conferred, soft costs and the cost of upgrades” — and states that “the value of the consideration does not include the amount of HST paid on the purchase price”. The second is the Ministry’s position, not the Act. So an assumed mortgage counts, and so does a vendor take-back.
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The section 1(1) definition of “land” runs past dirt and walls. It includes a leasehold interest and “goodwill attributable to the location of land or to the existence thereon of any building or fixture, and fixtures”.
Read that twice if you are buying a business. Goodwill is where a purchase agreement usually pushes value, on the instinct that goodwill is not land. Some of it is. The Ministry describes the registration field carrying the number as “VALUE of land, building, fixtures and goodwill subject to Land Transfer Tax” — all four. The mirror holds: genuine chattels are not land, and a chattels allocation must reflect real value.
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Section 2(1)(a) sets four bands: “one-half of 1 per cent of the value of the consideration for the conveyance up to and including $55,000”, “1 per cent of the value of the consideration that exceeds $55,000 up to and including $250,000”, “1.5 per cent of the value of the consideration that exceeds $250,000 up to and including $400,000”, and “2 per cent of the value of the consideration that exceeds $400,000”. The Ministry’s rate page publishes the same four, read 2 September 2026. Rates change; re-check them.
A fifth band does not reach commercial premises: section 2(1)(b) adds half of one per cent above $2,000,000 only where “the conveyance is a conveyance of land that contains at least one and not more than two single family residences”. A warehouse or clinic pays 2 per cent above $400,000 whatever the size. On parameters I have chosen rather than data — $1,200,000 attributed to the land, no residence — that is $275, $1,950, $2,250 and $16,000: $20,475. See the bands.
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Toronto’s tax is not a provincial surcharge but a City by-law under its own power. City of Toronto Act, 2006, section 267(1), in Part X, Power to Impose Taxes: “The City may, by by-law, impose a tax in the City in accordance with this Part if the tax is a direct tax.” The by-law is Municipal Code Chapter 760, applying “to purchases on all properties in the City of Toronto in addition to the Provincial Land Transfer Tax as of February 1, 2008”.
For land other than a one- or two-unit residence, § 760-9.2B sets bands identical to the province’s, ending at “2 percent of the value of the consideration which exceeds $400,000”. The City’s rates page carries the same rows, so the premises above attracts a further $20,475.
One trap: graduated rates announced 17 December 2025, effective 1 April 2026, reach only high-value residential property of one or two single-family residences — a commercial building is unaffected. Compare: municipal versus provincial.
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The buyer swears to the number. Section 5(1) requires the Minister be given, first, “The true value of the consideration for the conveyance”, and section 5(2) puts it on the transferee or the solicitor acting. Section 5(4) lets an unsatisfied land registrar “refuse to register the conveyance until the Minister has signified over his or her signature” that the value is true: the affidavit requirement.
The Minister can rebuild the split. The anti-avoidance rule at section 12.1(6)(c) provides that “the value of the consideration may be determined and may be apportioned among parts of the land or lands being conveyed”, and section 2.3(1) backstops a deal broken into pieces where “one of the reasons for conveying the land by more than one conveyance is to reduce the total amount of tax payable”.
The allocation schedule therefore does two jobs. The sibling how the purchase price gets allocated covers the income-tax side. The point here is narrow: a dollar moved onto the real property costs the buyer two cents, four in Toronto.
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Where the company already owns its building, a share purchase ordinarily leaves the land alone. The Ministry’s guidance on unregistered dispositions says: “The transfer of shares of a corporation which holds land in its own right does not ordinarily attract tax under the Act.” The reasoning is company law: a corporation’s property is its own, not its shareholders’. See share sale versus asset sale.
That is a position, not a blanket exemption. Where the corporation holds legal but not beneficial title, the guidance warns that “the change in beneficial ownership of the land, which often occurs coincident with the transfer of the shares, is taxable”.
Restructuring first needs care: moving the building out is itself a conveyance, and clause (g) deems fair market value where land goes to a corporation for shares or out to a shareholder. The Ministry’s corporate page confirms “the taxable consideration is deemed to be the fair market value of the land at the time of registration of the conveyance”. See buying real estate alongside the business.
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Where the vendor keeps the building and leases it back, the term decides everything. Section 1(6) says no tax is payable on registering a lease, a transfer of a lessee’s interest, or a notice of either, if it “is for an unexpired term that cannot exceed 50 years, including any renewals or extensions of the term provided for in the lease”.
Cross that line and the base is not the rent. Clause (c) substitutes “the fair market value, ascertained as at the time of the tender or submission for registration, of the land to which the lease extends”. A 40-year term with three ten-year options can run 70 years, and is taxed on the whole property: leasehold interests. The sibling keeping the building covers a vendor retaining the premises; the overlay is that the carve-out transfer is taxable while the lease usually is not. See commercial property.
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Section 2.2, marginal note Person liable for the tax, fixes liability on whoever ends up with the interest: “Every person who immediately after the registration of a conveyance has a beneficial interest in the land that was acquired or increased as a result of a conveyance or as part of an arrangement relating to the conveyance is liable for the tax payable under section 2”. A buyer wanting it shared takes it out of the price.
An understated figure costs more than the shortfall. Section 6.1 carries “a fine of not less than 25 per cent of the tax payable and not more than twice the amount of the tax payable”, and section 15.1(1) lets the Minister register “a lien and charge on any interest the taxpayer liable to pay or remit the tax has in the real property described in the notice”, with refunds claimable only “within 4 years after the date of payment of the tax”. All Ontario, read 2 September 2026; the municipal layer is Toronto’s alone, and corporate transfers have their own rules.
Ordinarily no. Because a share purchase does not register a conveyance of the land itself, the Ministry of Finance treats a transfer of shares in a corporation that holds land in its own right as not ordinarily attracting the tax. That protection is not absolute — if the corporation holds only legal title while beneficial ownership changes hands alongside the shares, the change in beneficial ownership is taxable.
Yes, if the goodwill is attributable to the land’s location or to a building or fixture on it. The Land Transfer Tax Act’s definition of land is written to reach exactly that kind of goodwill, and the Ministry’s own registration field records a single combined value for land, building, fixtures and goodwill — so pushing value into goodwill does not avoid the tax the way allocating it to genuine chattels does.
No. Section 3(2) taxes an unregistered disposition of a beneficial interest in land on the thirtieth day after the disposition, calculated at the same rates as a registered conveyance. The two charges do not stack: if the instrument is registered and the tax paid within 30 days, the unregistered-disposition charge is switched off.
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