Record Requirements for Real Property and Rules of Forfeiture – Toronto Tax Lawyer Analysis
Changes to Reporting Rules for Corporations Owning Real Property
Corporations incorporated under the Ontario Business Corporations Act (the “OBCA”) will have additional record keeping requirements regarding real property as of December 10, 2016. Specifically, corporations that hold an interest in real property located in Ontario will need to maintain a register of all real property in which they have an ownership interest in compliance with section 140.1 of the OBCA. The OBCA requires that the register be located at the corporation’s registered head office, identify each property that the corporation has ownership an interest in, and show the date the corporation acquired the property as well as the date the corporation disposed of it if applicable. Furthermore, the corporation is required to also keep a copy of any deeds, transfers or similar document that contains the following information with respect to each property listed in the register:
- The Municipal Address, if any;
- The registry or land titles division and property identifier number;
- The legal description, if any;
- The assessment roll number, if any.
Additionally, the form that the register must be kept in may be a bound or loose leaf book or may be recorded by any system of mechanical or electronic data processing or any other information storage device.
Corporations incorporated prior to December 10, 2016 have a 2 year grace period within which to comply with the new record keeping requirements. However corporations incorporated after December 10, 2016 must comply with the new requirements as soon as they acquire an ownership interest in land.
Notably, the amendment does not define what an ownership interest in land means. Certainly a legal interest would apply, however it is less clear how this applies to someone with only a beneficial ownership interest in land. Additionally, it might also be said the holder of a mortgage or charge has an ownership interest in land. Failure to comply with the record keeping requirements may result in fines for the corporation as well as the directors under the OBCA. Call our top Toronto tax firm and make sure you are meeting the new requirements.
Changes to the Rules of Forfeiture
In addition to the record keeping requirement, there has also been a change in the rules of forfeiture for Ontario corporations as the new Forfeited Corporate Properties Act (the “FCPA”) came into force on December 10, 2016. Before, where an Ontario corporation was dissolved, any personal or real property held by the corporation would be forfeited to the Crown. However, there was a 20 year period within which the corporation could be revived and as a result, the revived corporation would also recover ownership of the personal and real property that it held prior to dissolution. The new changes still allow for a 20 year period in which to revive the corporation; however, where the revival occurs 3 years or more after the date of dissolution, the corporation is no longer entitled to recover its personal or real property, subject to certain limited exceptions. Where a corporation was dissolved before this change came into effect, the 3 year period starts on December 10, 2016. However, where the corporation has been dissolved for more than 3 years but less than 10 years, the original owner of the corporation can make an application for the Crown to waive or release part of all of the Crown’s interest in the forfeited property if the Minister is satisfied that the applicant has a legal or moral claim to the property based on facts that arose before it was forfeited. Talk to one of our experienced Toronto tax lawyers and make sure you are not negatively impacted by these new changes.