B.C. looks to close tax loophole

Property investors in B.C. would do well to pay attention as the provincial government is pledging to close a loophole that allows some real estate investors to avoid paying the province’s property transfer tax.

“Canadians, the vast majority of whom pay the taxes they owe, want to know that everyone is doing the same,” Finance Minister Mike de Jong told The Globe and Mail, when asked about the newspaper’s findings in a recent investigation that found some wealthy foreign investors are buying real estate in Vancouver and putting it in the names of relatives or corporations, which helps the investors avoid taxes.

de Jong said B.C. will look to close the loophole that currently allows corporations whose sole purpose is to hold properties in trust for an individual to transfer shares in the trust to any new owner without triggering a change in ownership. In other words, the buyer pays no transfer tax.

The Globe investigation purported that one third of 250 multimillion-dollar Vancouver houses purchased recently in areas popular with Chinese buyers are registered to homemakers, students and corporations, obscuring the real buyers’ identities.

A source with the Canadian Revenue Agency (CRA) also told The Globe that Canada’s three-decade-old tax treaty with China is weak and out of date, making it almost impossible to verify income in that country.

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