Effective August 2, 2016, an additional property transfer tax applies to residential property transfers to foreign entities in the Greater Vancouver Regional District.
The Amount of the Additional Property Transfer Tax
The additional tax on property transfers to foreign entities is 15% of the fair market value of the foreign entity’s proportionate share of a residential property located in whole or in part in the Greater Vancouver Regional District, excluding Tsawwassen First Nation lands. This tax applies in addition to the general property transfer tax.
The Greater Vancouver Regional District includes Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and Electoral Area A. The additional tax does not apply to properties located on Tsawwassen First Nation lands.
The additional tax applies on all applicable transfers registered with the Land Title Office on or after August 2, 2016, regardless of when the contract of purchase and sale was entered into.
This tax applies in addition to the general 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 normally be exempt from property transfer tax.
What/Who is a Foreign Entity
Foreign entities are transferees that are foreign nationals, foreign corporations or taxable trustees.
Foreign nationals are transferees who are not Canadian citizens or permanent residents, including stateless persons.
Foreign corporations are transferees that are corporations:
- 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 trustees are trustees that are a foreign national or foreign corporation, or a beneficiary of a trust that is a foreign national or foreign corporation.
Enforcement of the Additional Property Transfer Tax
To ensure compliance, where transactions involve Canadian citizens and permanent residents their identity must be verified using official government issued identification.
Furthermore, the social insurance number (SIN) must be collected and verified to be that of the transferee by viewing the SIN card and comparing the name or by viewing one of the following:
- T4 Statement of Remuneration Paid (slip)
- Canada Revenue Agency Notice of Assessment
Invalid social insurance numbers or other discrepancies on a return will lead to an audit and investigation of the transaction.
Failure to pay the additional tax as required or purposely completing the general or additional property transfer tax return with incorrect or misleading information may result in a penalty of 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. The penalties apply to anyone who participates in tax avoidance.
Each transferee is jointly and severally liable for the additional tax payable. If one transferee does not pay the required additional tax, the other transferees, including Canadians, must pay that transferee’s share of the additional tax payable.
For further or more updated information, please check out the Property Transfer Tax section of the BC Government’s website at http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax .