BC clamps down on foreign property buyersBy Andrew Rickard | July 27 2016 09:43AM
British Columbia is introducing an additional transfer tax for foreign real estate buyers in Metro Vancouver. Starting on August 2, foreign nationals will have to pay an extra 15% tax on the residential portion of a property.
Initially the tax will only apply to Metro Vancouver but the BC government says it will continue to monitor data on foreign investment and ownership in the province, and notes that it has the ability to implement similar measures in other areas.
"A trustee will be subject to the additional tax if the trustee is a foreign entity, or if at least one beneficiary of the trust is a foreign entity. Similarly, a corporation would be liable if it is not incorporated in Canada, or if the corporation is incorporated in Canada but is controlled by foreign entities," explains the statement released on July 26. "The additional tax will only apply to the portion of a property’s value that is for residential use. For example, if a foreign corporation purchases a mixed-use development that combines residential space with commercial space, the additional 15% tax will apply only to the portion of the property’s value that is for residential use."
The new legislation also includes anti-avoidance measures to prevent buyers from hiding behind a local trustee. "The legislation is structured to look through Canadian trustees to beneficiaries of the trust as an anti-avoidance mechanism. If the trustee is foreign, the transaction is taxable even if the beneficiaries are not foreign," reads the government backgrounder.
Those who fail to pay the tax face fines of up to $200,000 for corporations and $100,000 for individuals, as well as possibility of imprisonment for a maximum of two years.