Canada: Changes To Property Transfer Tax And APTT (Foreign Buyers Tax) Effective February 21st

Last Updated: February 22 2018
Article by Sarah W. Jones

Changes to the Province's Property Transfer Tax system have been some of the most highly anticipated aspects to the 2018 BC NDP Budget.  At first glance based on the Budget and the corresponding Homes for B.C. – A 30-Point Plan for Housing Affordability in British Columbia, the Province has not taken immediate steps apply PTT to beneficial transfers of land (i.e. those where a Form A Transfer is not filed with the Land Title Office).  However, the Province seems to be setting the stage for potential changes to this landscape in the time ahead.

Tracking Beneficial Ownership

Starting tomorrow, the Province will require additional information about beneficial ownership on the Property Transfer Tax Return submitted with every Form A Transfer at the Land Title Office.  This is an expansion on the additional information the Province began collecting in 2017 on PTT Returns.  A registry setting out beneficial ownership of land in B.C. will also be established and made publicly available; this registry will be administered by the B.C. Land Title Survey Authority. It is also expected that legislative amendments will be implemented that require corporations in B.C. to hold accurate and up to date information on beneficial owners in their records offices.  It is expected that the beneficial owner registry and information in corporate records' offices will also be available to federal and provincial tax and law enforcement authorities.  The timeframe and process for establishing these registries, and details on how information will be collected for existing properties, is not yet clear.

New 5% PTT Rate on Residential Properties over $3,000,000

Prior to today's Budget release, the PTT rate on the fair market value of the land and buildings on the date of acquiring a Land Title Office registered interest in property was as follows: 1% on the first $200,000; 2% on the portion greater than $200,000 and up to and including $2,000,000; and finally 3% on the portion greater than $2,000,000.  NOW, with changes in the Budget, the PTT payable on the proportion of the value of residential property over $3,000,000 will be 5% rather than 3%.  Importantly, this change in the PTT amount for properties over $3,000,000 does exempt commercial land, but does not exempt properties classified as residential and farm, or that is residential mixed class (i.e. residential and commercial).  Starting in 2019, the Province will also be increasing school tax on homes assessed over $3,000,000, to the portion on the value in excess of that amount.

Foreign Buyers Tax Increased and Expanded

Foreign buyers are also being targeted with increased tax rates under the Budget – the additional PTT rate for foreign buyers (generally, those who are not Canadian citizens or permanent residents) is increasing from 15% to 20%.  In addition, the Province is extending the area in which the foreign buyers tax applies, to include the Capital Regional District, the Fraser Valley, the Central Okanagan and the Nanaimo Regional District.

Additional Changes

Additional proposed changes to the Property Transfer Tax Act include:

  • Increasing the limitation period for assessments to six years;
  • Enabling the collection of additional buyer information;
  • Introducing administrative penalties for non-compliance;
  • Extending the application of the general anti-avoidance rule; and
  • Enabling tax administrators to compel access to information relevant to transfers such as information held in a Multiple Listing Service database.

Exemptions

Details about exemptions and transitional rules relating to the increased 5% PTT and foreign buyers tax can be found here.  Importantly, if a written agreement has been entered into on or before February 20, 2018, and the Land Title Office registration occurs before or on May 18, 2018, then you don't have to pay the additional property transfer tax.

It is expected that the Province will announce further details about the timing and implementation of these changes in the coming weeks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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