Canada: Bill 45: No Longer Mere Speculation

On October 16, 2018, the British Columbia government announced that it had introduced enabling legislation as part of its promise to target speculation in British Columbia's housing market. Bill 45, the Budget Measures Implementation (Speculation and Vacancy Tax) Act (the "Bill") marks the government's first step towards implementing the speculation tax in British Columbia, and has undergone a first reading in the Legislature. The Bill is expected to become law later in 2018, and introduces a new speculation and vacancy tax (the "SVT") on residential property owners in designated regions of the province. The SVT will apply to owners of residential property in the 2018 calendar year, and will be in addition to any municipal levies, such as the City of Vancouver's Empty Homes Tax. As noted above, the Bill is not yet law and it is expected that there will be changes to it if and when it comes into force.

Who is taxed

Owners of residential property in the following designated regions will be subject the SVT, unless they are covered by a specific exemption (discussed later in this article):

  • municipalities within the Capital Regional District;
  • municipalities within the Metro Vancouver Regional District, excluding Bowen Island, the Village of Lions Bay and Electoral area A, but including UBC and the University Endowment Lands;
  • the City of Abbotsford;
  • the District of Mission;
  • the City of Chilliwack;
  • the City of Kelowna and the City of West Kelowna; and
  • the City of Nanaimo and the District of Lantzville.

The Bill also expands the definition of "owner" beyond the colloquial use of the word to include (among other things):

  • a registered owner in fee simple;
  • a registered holder of the last registered agreement for sale of a residential property;
  • a life tenant under a registered life estate in a residential property; and
  • a person occupying residential property under a registered lease (and in whose name the property is assessed under the Assessment Act).

Amount of tax

In the 2018 calendar year, all residential property owners will be subject to the SVT, at a rate of 0.5% of their property's assessed value, unless the owners can claim an exemption or are members of a satellite family (as later described in this article).

Beginning in 2019, the amount of the SVT will vary depending on the owner's tax residency, citizenship status, and what portion of the owner's annual income was earned in Canada. The SVT will be based on a percentage of the assessed value of the owner's property, as of July 1st of that calendar year. Current legislation indicates that the SVT will be assessed as follows (although recent commentary indicates that these rates may be changing):

  • 0.5% for owners who are Canadian citizens or permanent residents, and resident in British Columbia for tax purposes;
  • 1% for owners who are Canadian citizens or permanent residents, but not resident in British Columbia for tax purposes; and
  • 2% for everyone else.

Residential property owned by corporations, partnerships or trusts will be subject to the SVT, which will be assessed on similar considerations of the entity's shareholders, partners, or beneficiaries.

The government has also indicated that "satellite families" will be required to pay the 2% tax rate, despite their residency status or citizenship. A satellite family is an owner, or an owner (together with his or her spouse), who earn more than 50% of their annual income outside of Canada.


As previously stated, each owner must presumptively pay the SVT unless the owner can claim an exemption. Certain entities (the "Prescribed Entities") and lands (the "Prescribed Lands") will be exempt from the SVT.

Prescribed Entities include (among others):

  • registered charities;
  • certain housing associations;
  • municipalities;
  • the government and agent thereof;and
  • Indigenous nations.

Prescribed Lands include (among others):

  • lands that are uninhabitable as a result of (among other things) earthquakes, floods, fires, or oil and gas leaks;
  • residential property that, as of October 31st of each year, is used as a daycare and is not a community care facility, licensed under the Community Care and Assisted Living Act to provide childcare;
  • vacant land, for 2018 only; and
  • strata accommodation property (strata property which is part of a strata plan that includes 20 or more strata lots, and which is rented or offered for rent as overnight accommodation for periods of less than 28 days, for a prescribed portion of the year), for 2018 and 2019 only.

The Bill also exempts (among other things) lands which are used as principal residences, or which are tenanted for prescribed portions of the year, as well as property on the year it is purchased by an owner (so long as the owner paid the required property transfer tax on the property).

Tax credits

Owners who are not eligible for an exemption may still be eligible for a tax credit to reduce or eliminate the SVT owing. British Columbia resident, who own a secondary property that is not their principal residence, are eligible for a tax credit of up to $2,000, effectively exempting properties assessed at $400,000 or less. However, this credit is only available for one property per owner, and cannot be transferred to a spouse.

Owners who are Canadian citizens or permanent residents but not residents of British Columbia will be eligible for a tax credit in the amount of 10% of their annual income claimed in British Columbia. This credit can be applied against the 1% SVT owing on all of their residential properties.

Finally, foreign owners and satellite families are eligible for a similar credit in the amount of 20% of their annual income claimed in British Columbia, which can be applied against their 2% SVT. However, this credit cannot reduce the SVT below the amount that a British Columbia resident would have owed in the same circumstances.


All owners will be required to file separate SVT declarations for each property in which they have an interest by March 31st of each calendar year (unless they receive an extension). If a party fails to file a declaration by March 31st, then, for each late declaration, the party can be charged a penalty of up to $100, plus an additional per diem penalty of $25 for each day the declaration is late (up to a maximum amount of $2,500). Additionally, effective as of 2020, the Bill permits the relevant taxation authorities to impose a penalty of up to 10% on any unpaid taxes.

Finally, professional advisors who assist clients in completing SVT declarations should also be careful of the declarations' accuracy, since parties may be liable for penalties of up to $100 plus 100% of any re-assessed taxes if the party knowingly or negligently files or assists in filing an incorrect SVT declaration.


The provincial government is of the view that, between the exemptions and tax credits, 99% of British Columbia residents will not be subject to the SVT. However, some municipal governments from the designated taxable areas disagree, and have been advocating for an opt-out clause over concerns that the SVT will hinder residential developments. In any event, it is evident that the SVT will change the landscape of residential ownership of real property, as well as residential developments within British Columbia.

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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Scott McLeod
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