Canada: BC Government Moves Ahead With Speculation And Vacancy Tax

Last Updated: November 14 2018
Article by Dwight D. Dee, Sharon MacMillan and Kathryn Gullason

On February 20, 2018, the BC Government announced its intention to implement a new tax on residential properties in certain regions of the province to address the housing affordability crisis. The "speculation tax" quickly became the water-cooler topic du jour, sparking widespread public debate.

The BC Government is now moving ahead with the new Speculation and Vacancy Tax (the "Tax"). On October 16, 2018, the BC Government introduced Bill 45, the Budget Measures Implementation (Speculation and Vacancy Tax) Act ("Bill 45"), which has received a first reading in the Legislature. If passed, the Tax will apply starting this year.

This article summarizes the provisions of Bill 45. However, through the legislative process, amendments to Bill 45 are expected, especially in light of the minority position of the BC government.

Who has to pay?

The Tax is an annual tax paid by owners of residential properties located in certain designated regions of the province. "Owner" is defined broadly under the new legislation to include: a registered owner in fee simple; a registered holder of the last registered agreement for sale; a life tenant under a registered life estate; and a person occupying residential property under a registered lease (and in whose name the property is assessed under the Assessment Act).

Unless an exemption applies, owners of residential property located in one of the following taxable regions are subject to the Tax:

  • 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.

Reserve lands, treaty lands and lands of self-governing Indigenous Nations are not included in the taxable regions. Islands that are accessible only by air or water are also not included in taxable regions.

Residential properties with an assessed value equal or less than $150,000 are excluded.

The Tax is distinct from the City of Vancouver's Empty Homes Tax, and owners of residential property in the City of Vancouver could be subject to paying both taxes.

How much is the tax?

As set out in Bill 45:

  • For 2018: 0.5% of the property's assessed value for all owners;
  • For 2019 onwards:

    • 0.5% for BC residents who are Canadian citizens or permanent residents (and not members of a satellite family).
    • 1% for Canadian citizens and permanent residents who are non-BC residents for income tax purposes (and not members of a satellite family); and
    • 2% for all other owners.

Within days after the introduction of Bill 45, the BC Minister of Finance Carole James announced that the government agreed with members of the BC Green Party to make several amendments to Bill 45 to secure Green Party support. The key amendment is the removal of the 1% rate. If this amendment is made, the rate of 0.5% would apply to all Canadian citizens and permanent residents who are not members of satellite families regardless of whether they are residents of BC or not.

A "satellite family" is an individual or an individual together with his/her spouse where a majority of their total worldwide income for the year is not reported on a Canadian income tax return.

The applicable tax rate for corporations, partnerships or trusts who own residential property will depend on the status of the entity's shareholders, partners or beneficiaries. For corporations, in order to qualify for the lower rates, all the "corporate interest holders" must satisfy the requirements for the lower rates. Generally, "corporate interest holders" are defined to be individuals who: (i) have legal or beneficial ownership or control, directly or indirectly of 25% of the voting rights or 25% or more of the value of the equity of the company; (ii) otherwise have the right to, directly or indirectly, appoint or remove from office the majority of directors; or (iii) has the right to exercise or does exercise significant influence or control over the corporation. Generally, for partnerships, all partners would have to satisfy the requirements for the lower rates. Also generally, for trustees who hold residential properties, all of the beneficial owners in respect of the interest in the residential property would need to satisfy the requirements for the lower rates.


Every residential property owner in a designated taxable region must complete an annual declaration for the Tax by March 31st of each year. The BC Government will send a declaration letter in mid-February to taxable residential property owners which will describe how to complete the declaration and how to claim any relevant exemptions.

If an owner fails to file a declaration by March 31st, they 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 of $2,500). Further, starting in 2020, taxation authorities can impose a penalty of up to 10% on unpaid taxes. Parties who knowingly or negligently file or assist in filing an incorrect declaration are liable for penalties up to $100 plus 100% of any re-assessed taxes.


Bill 45 includes a long list of exemptions. Some key exemptions for individuals are as follows:

  • Principal Residence Exemption: An owner's principal residence is generally exempt from the Tax. A principal residence is the place where an individual resides for a longer period in a calendar year than any other place. To be eligible for this exemption, an owner must be a Canadian citizen or permanent resident of Canada who is a BC resident for income tax purposes and is not part of a satellite family.
  • Rental Exemption: Homes that are occupied by tenants are exempt from the Tax. To qualify for the exemption, the home must be occupied at least six months of the year in increments of one month or longer (for 2018, the minimum is three months of the year).
  • Residential Care Facility Exemption: If an owner is away from their home because they reside in a residential care facility due to age, disability, addiction, illness or frailty, they are exempt from the Tax for up to two years.
  • Medical Absence Exemption: An owner who is away from their principal residence because of medical treatment for themselves, their spouse or minor child is exempt from the Tax for up to two years. The medical condition must be certified by a medical practitioner, and the treatment impractical to obtain close to the owner's principal residence.
  • Death Exemption: If an owner dies in a taxation year, all owners of the property at the time of death and the deceased's personal representative are exempt from the Tax for the year of death and the tax year immediately following.

Other exemptions for individuals include (among others):

  • Exemptions for hazardous or damaged property;
  • Year of acquisition exemption;
  • Spousal separation exemption;
  • Bankruptcy exemption;
  • Exemption for testamentary trust for minor;
  • Exemption for properties with rental restrictions;
  • Exemption for strata accommodation unit;
  • Licensed daycare exemption; and
  • Vacant land exemption.

Many of the exemptions available to individuals are also available to eligible corporations, trustees or partners that own residential properties. Generally, corporations, trustees or partners can claim exemptions in a similar manner provided that their corporate interest holders, beneficial owners or partnership interest holders meet the same requirements that individual owners have to meet.

Owners of property that are under construction or substantial renovation are exempt if reasonable steps are being taken without undue delay to develop or renovate the property. Exemptions for land under development include:

  • Unoccupiable residence exemption: Owners are exempt if the residence cannot be occupied for 90 days in the calendar year due to construction or renovation or if there is not yet a residence on the property.
  • Conservation of heritage property exemption: Owners of a heritage property are exempt if the residence is unoccupied for 90 days in the calendar year due to renovations to conserve the heritage property.
  • Phased residential developments: Owners are exempt where specific multi-unit residential developments are being built in phases on two or more residential properties. The exemption is not available if the residence was occupiable for a period of 180 days in the year.
  • Vacant new inventory: Owners are exempt where the owner is the developer of five or more residences and at least one newly-built or newly-placed residence in the development:

    • has been offered for sale to the public this year,
    • but has not yet been occupied as a home.

No Tax will be levied for the 2018 tax year for land that has no residential property on it.

Certain specified owners of residential property are also exempt, including (among others):

  • an Indigenous Nation;
  • municipalities, regional districts, governments and other public bodies;
  • registered charities;
  • housing co-ops; and
  • certain not-for-profit organizations.

Tax Credits

Owners who are not eligible for an exemption may be eligible for a tax credit that would reduce or eliminate the tax.

BC residents are eligible for a tax credit of up to $2,000. This effectively exempts homes assessed at $400,000 or less. The credit is only available for one property per year and cannot be carried forward or transferred to a spouse.

In Bill 45, non-B.C. resident Canadians are eligible for tax credits to the extent that they pay B.C. income taxes. However, as proposed in Bill 45, the tax credit cannot reduce the tax rate below the tax rate paid by B.C. residents. As mentioned above, the government has agreed to make a change to Bill 45 such that all Canadian citizens or permanent residents not part of satellite families would be subject to the same rate as B.C. residents (0.5%). With this proposed amendment, it is not clear yet how tax credits will apply to Canadian citizens or permanent residents who are not part of satellite families.

Foreign owners and other owners of residential property that must pay the 2% rate can claim a tax credit equal to 20% of their B.C. income to reduce the tax owing. However, the tax credit cannot reduce the tax rate below the 0.5% payable by B.C. residents.


According to the BC Government, the Tax is designed to prevent housing speculation and help turn vacant and underutilized properties into homes for people who live and work in BC. The Tax is part of the government's 30-Point Plan to address the housing crisis. In recent months, the housing market, especially in Metro Vancouver has begun to cool, particularly for single family detached homes. It will be interesting to observe whether the Tax truly has an impact on home prices and affordability, especially in condominium and townhouse markets where prices have remained relatively elevated.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Dwight D. Dee
Similar Articles
Relevancy Powered by MondaqAI
Clark Wilson LLP
Miller Thomson LLP
Miller Thomson LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Clark Wilson LLP
Miller Thomson LLP
Miller Thomson LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions