In another attempt to cut down on tax evasion in real estate, the B.C. government announced new information disclosure rules for property buyers purchasing through a corporation or trust. Starting September 17, 2018, buyers will have to provide their name, birthdate, citizenship information, contact details and tax identification numbers, such as Social Insurance Numbers.
The goal of these changes is to make it easier for authorities to find out if buyers are paying all taxes owed.
“Not only is tax evasion in real estate fundamentally unfair, but it’s driving up the cost of housing for people who live and work in our communities.”
“Our government has been clear that the days of skirting tax laws and hiding property ownership behind numbered companies and trusts are over,” said Finance Minister Carole James. “Not only is tax evasion in real estate fundamentally unfair, but it’s driving up the cost of housing for people who live and work in our communities.”
These new rules will apply to every kind of real estate, including residential, commercial and industrial. However, charitable trusts and corporations such as hospitals, schools and libraries will be exempt.
While the current government believes these new changes will ensure that corporations and trusts pay all taxes they owe, B.C. Green Party’s Leader Andrew Weaver says they don’t go far enough. He claims that the changes only deal with property ownership anonymity issues, but the bare trust loophole remains. This loophole allows individuals to purchase a property in a trust, sell their shares, and transfer ownership without changing the title — this lack of a name change (because you end up keeping the name but transferring ownership of shares) enables the buyer to avoid paying the property transfer tax.
Weaver claims that this is a well-known tactic in the developing world, especially among offshore speculators.
“They haven’t closed that loophole,” explained Weaver after yesterdays announcement. “They still left it open, but now it’s transparent, and it’s almost like you’re taking half steps in actually dealing with it.” Weaver is annoyed because “frankly the government said it was going to do ages ago, and it still hasn’t done it.”