On July 28, 2016, the BC Government passed legislation to
implement changes to the Property Transfer Tax Act. These changes
will apply an additional 15% tax on purchases by foreigners of
residential property in the Greater Vancouver Regional District
(GVRD), excluding Tsawwassen First Nation lands.
Transfers subject to the tax
All registrations at the Land Title Office that occur after
August 1, 2016, will be subject to the tax. There is no exception
for pre-existing contracts and therefore, all contracts, regardless
of when they were entered into, will be subject to the tax.
The tax will apply to foreign nationals, foreign corporations
and taxable trustees, which include:
Individuals who are not citizens or
permanent residents of Canada;
Corporations that are not
incorporated in Canada;
Canadian corporations controlled by
foreign nationals or foreign corporations (other than corporations
listed on a Canadian stock exchange); and
A trust which has a foreign entity
The tax will also apply where a foreign individual or foreign
corporation holds a beneficial interest in the residential property
immediately after the registration at the Land Title Office.
The new legislation is broad and captures transactions that are
beyond the intended scope of the legislation. For example, where
one of four beneficiaries is a foreign individual, the trustee of a
bare trust will be considered a taxable trustee, and the entire
transaction will be subject to the tax instead of limiting the tax
to 25 percent of the transaction.
There are also anti-avoidance provisions in the new legislation,
which have the ability to recharacterize a transaction structured
to avoid the application of the tax. These provisions will apply
where the primary purpose of a transaction or series of
transactions is to avoid the tax.
Rates and penalties
The 15% tax is in addition to the property transfer tax already
payable on a transaction: at the top end, this will mean an 18% tax
on the portion of the purchase price over CA$2 million. For
example, if a foreign national purchases a home in the GVRD for
CA$3 million, the tax rate will be 16% on the first CA$200,000, 17%
on the amount up to CA$2 million and 18% on the remaining CA$1
million, for a total tax of CA$518,000.
There are also stiff penalties that may apply for
non-compliance: a penalty of up to CA$200,000 for corporations and
a penalty of up to CA$100,000 for individuals, in addition to
potential jail time.
Exemptions not available
Transactions which are typically exempt from the property
transfer tax (such as transfers between spouses and close family
members, transfers to surviving joint tenants and transfers on the
amalgamation of corporations), will be subject to the 15% tax.
The tax will apply to all transfers of residential real estate
in the GVRD, which 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
If the property being transferred is mixed-use property or
farmland, the tax will apply only to the residential portion of the
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