Can You Avoid Land Transfer Tax Legally When Buying or Transferring Property in Ontario?

Yes, but only through exemptions, refunds and transactions the law already recognizes, not by hiding the real price. Land transfer tax is normally calculated on the value of the consideration, including any mortgage the buyer assumes. The Act defines that broadly as the gross sale price plus any benefit of whatever kind conferred as part of the arrangement.

Transfers between spouses or former spouses are exempt where the only consideration is assuming a registered mortgage, or where they are made under a written separation agreement or court order. First-time homebuyers who meet the conditions may claim a refund of up to $4,000. There is no general exemption for gifts of land.

Understating the price or making other false statements is an offence: the fine is at least the greater of $1,000 or 50% of the tax that should have been paid, up to twice that tax, and a court can also impose imprisonment of up to two years. Where unpaid tax results from fraud or wilful default, a further penalty of the greater of $500 and 25% of the unpaid tax may be assessed. A general anti-avoidance rule also lets the tax benefit of an avoidance transaction be denied.