previous post of February 29 (co-authored by Conrad Rego and
Patrick Beechinor) we discussed the implications of the increase in
B.C. property transfer tax from 2% to 3% on that portion of a
property's value which exceeds $2 million. We also noted that
effective in the Spring, the names and addresses of all
beneficiaries of bare trustees are to be disclosed by the
transferee upon transfer to any bare trustee. Though no reason was
given by the Province for the requirement for beneficiary
disclosure, industry participants have surmised that the disclosure
may be a precursor for collecting property transfer tax on
beneficial transfers, which are not currently taxable transactions
under the Property Transfer Tax Act (British
On April 1, 2016, a new bill was announced in the B.C.
Legislature: the "Property Transfer Tax Fairness
Act". If adopted, this legislation would require
property transfer tax to be paid on assignments and beneficial
transfers, other than beneficial transfers that occur by reason of
the death of the transferor, for the purpose only of providing
security to creditors, or by virtue of leases not exceeding 50
years (including any renewals or extensions provided for in the
lease or a related agreement such as an option).
The Explanatory Note to the bill states that the bill
"closes two unfair loopholes in the Property Transfer Tax
Act. The first clarifies the intent of the existing Property
Transfer Tax that the Property Transfer Tax is required to be paid
by so-called Shadow Flippers each time an agreement for sale is
assigned, even if the assignment is not registered in the Land
Registry. The second clarifies the effect of transferring a
beneficial interest of a trust as a taxable transaction captured by
the Act. The bill does not propose new taxes, but instead ensures
the fair application of existing taxes to everyone, including
speculators and large institutional commercial property investors
who have been permitted to operate with unwritten exemptions from
the tax by the Provincial Government."
The bill was introduced by Mr. John Horgan of the Opposition.
This may mean that it is unlikely to pass. The stated objectives
are debatable with much opinion and support on both sides. However,
if it does pass, there are substantial ramifications for industry
participants in terms of how they organize their business affairs.
In particular the benefit of holding registered interests in land
through bare trustees will be diminished.
We will follow the progress of the bill and update our
readership with any new developments.
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