B.C. Implements New Tax for Foreign Buyers | KPMG | CA

B.C. Imposes Additional 15% Property Transfer Tax for Foreign Buyers

B.C. Implements New Tax for Foreign Buyers

British Columbia introduces a 15% property transfer tax for foreign buyers of residential property in the Greater Vancouver Regional District.

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B.C. Imposes Additional 15% Property Transfer Tax for Foreign Buyers

This additional 15% tax, which will apply to all applicable transfers registered with the Land Title Office on or after August 2, 2016, is in addition to the general property transfer tax.

The province released draft legislation implementing these new tax measures in Bill 28 on July 25, 2016. This bill also provides the legislative authority to implement a vacancy tax on vacant homes, however further details of this tax have not yet been announced.

The additional 15% property transfer tax follows other property transfer tax measures that British Columbia recently enacted in response to concerns over housing price increases. These measures were announced in British Columbia's 2016 provincial budget.

Foreign entities
According to British Columbia's Information Sheet on the additional 15% property transfer tax, the additional property transfer tax will apply to a transferee who is a:

  • Foreign national (i.e., an individual who is not a Canadian citizen or permanent resident, including a stateless person)
  • Foreign corporation (i.e., either not incorporated in Canada or incorporated in Canada, but controlled in whole or in part by a foreign national or other foreign corporation, unless the shares of the corporation are listed on a Canadian stock exchange)
  • Taxable trustee (i.e., a trustee of a trust that is a foreign national or foreign corporation, or a trust beneficiary that is a foreign national or foreign corporation).

Additional property transfer tax
British Columbia's Information Sheet explains that the additional tax on property transfers to foreign entities is generally 15% of the fair market value of the foreign entity's proportionate share of a residential property that is located in whole or in part in the Greater Vancouver Regional District (excluding Tsawwassen First Nation lands). The value of the residential portion of a transfer is calculated in the same way as for the property transfer tax.

The additional tax applies on the foreign entity's proportionate share of any applicable residential property transfer, even when the transaction may be exempt from the property transfer tax. This includes transactions such as:

  • A transfer between related individuals
  • A transfer resulting from an amalgamation
  • A transfer to a surviving joint tenant
  • A transfer where the transferee is or becomes a trustee in relation to the property, even if the trust does not change.

The additional tax does not apply to non-residential property, or to trusts that are mutual fund trusts, real estate investment trusts or specified investment flow-through trusts.

Registering a transfer
Foreign entities or their legal representative must file an Additional Property Transfer Tax Return (FIN 532) and pay any additional tax (with the general property transfer tax) at the time the property transfer is registered with the Land Title Office.

The amendments include anti-avoidance rules to prevent transactions designed to avoid the tax.

Where there are multiple transferees, if one transferee does not pay the required additional tax, the other transferees are liable for the unpaid tax. Transferees that fail to pay the additional tax as required may be subject to a penalty equal to the unpaid tax plus interest and a fine of $200,000 for corporations or $100,000 for individuals and/or up to two years in prison.

For more information, contact your KPMG adviser.

Information is current to July 26, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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