Steven Flynn comments on BC’s new speculation and vacancy tax and the impact on foreign nationals who own Canadian real estate
Canada Revenue Agency (CRA) is poised to receive significant data from the BC government that will help tie home ownership to income declarations. While BC's speculation and vacancy tax is a measure to address the housing crisis in major urban centers in BC, it can also have an impact on “satellite” families who declare very little as Canadian income and those who own a secondary urban home that remains empty for most of the year.
Satellite families are defined as those where the primary breadwinner earns (and declares) the bulk of their income abroad while their families live in BC paying little Canadian income tax and using taxpayer-funded social services. The BC speculation and vacancy tax provides information to allow CRA to conduct complex real estate audits that will identify those people who may well be considered Canadian residents for income tax purposes.
As Steven notes, “in general terms, by filing for an exemption under the B.C. speculation and vacancy tax, you’re admitting to a government agency that you’re a Canadian resident for income tax purposes. The expectation is that the individual is subject to Canadian income tax of their worldwide income."
Questions about how the new tax works and the impact it may have on your situation? Please contact us at your convenience.