Undertaking required where there may be additional consideration or the value of consideration depends on valuation
2 UNDERTAKINGS
The Land Transfer Tax undertaking
- An acknowledgement to provide documentation and information
- An acknowledgement to pay any additional Land Transfer Tax and interest determined to be payable.
An undertaking is an agreement whereby the taxpayer or their representative agrees to provide further documentation and information to the MOF to ensure that the correct value of the consideration was declared and that the correct amount of tax is or has been paid for any conveyance.
The undertaking includes a further agreement to pay any additional land transfer tax and accrued interest which may be payable to the MOF. Interest continues to accrue on any tax exigible.
The undertaking also provides that an amended Affidavit will be provided where the value of the consideration has been determined to be different than that declared at registration.
Undertakings will be accepted from either the transferee or their representative.
Situations where a Land Transfer Tax undertaking is required at the Land Registry Office
- Fair Market Value
- Tentative Value of Consideration
- Land Registrar's Discretion
An Undertaking must be provided to the Land Registry Office by either the transferee or the transferee's representative in the following situations:
- Fair market value. Where the value of the consideration is deemed to be equal to the fair market value of the lands, the MOF must confirm that the value is within an acceptable range.
Examples of situations where fair market value applies:
- Transfers to corporations where part of the consideration consists of the allotment and issuance of a share or shares of the transferee corporation.
- Transfers from corporations to shareholders.
- Leases which can exceed 50 years.
- Some final orders of foreclosure and quit claims in lieu thereof.
- Land exchanges.
- Tentative value of the consideration. Where the agreement between the parties may result in additional consideration to be given pending future events, the MOF will monitor the transaction and ensure additional tax is collected should the future conditions materialize.
- Land Registrar's discretion. If for any reason the Land Registrar is not satisfied with the Affidavit or supplementary affidavits, an undertaking may be required before registration as per subsection 5(4) of the Act.
Construction contract entered into as part of the sale arrangement is added to the value of consideration
11 FREQUENTLY ASKED QUESTIONS …
22. How is land transfer tax calculated on the purchase of a vacant lot which is subject to a construction contract?
Where a construction contract is entered into as part of the arrangement relating to the purchase of a vacant lot or lots, the land transfer tax would be calculated on the total cost of the lot plus the cost of construction.