In plain English
A landlord may collect a rent deposit (last month's rent) of no more than one rental period's rent; it can only be applied to the last month of the tenancy.
The statute text
105 (1) The only security deposit that a landlord may collect is a rent deposit collected in accordance with section 106.
(2) In this section and in section 106,
“security deposit” means money, property or a right paid or given by, or on behalf of, a tenant of a rental unit to a landlord or to anyone on the landlord’s behalf to be held by or for the account of the landlord as security for the performance of an obligation or the payment of a liability of the tenant or to be returned to the tenant upon the happening of a condition.
View this section on the official Ontario e-Laws site →
Reproduced under the King’s Printer for Ontario / Open Government Licence – Ontario. Confirm against the official e-Laws consolidation before relying on it.