In its continued campaign to monitor what it called “compliance risks” in Canada’s hottest housing markets, the Canada Revenue Agency has uncovered nearly $600 million in unpaid taxes in the British Columbia and Ontario real estate segments.
CRA auditors, which have been closely examining real estate transactions since 2015, found that the B.C. market has $169 million in unpaid taxes from home sales, while Ontario has $423 million.
The federal bureau further noted that in B.C., 54% of the unpaid amount was due to buyers not paying the GST, while 45% was from income tax. In Ontario, fully 90% of the unpaid taxes represented GST.
CRA stated that it is keeping a particularly close eye at the factors that tend to indicate tax evasion, such as unreported GST, capital gains, or worldwide income, as well as property flipping and questionable sources of funding for purchases.
According to Richard Kurland, a Vancouver immigration lawyer who has repeatedly called for closer oversight of real estate transactions and tighter regulation of wealthy investors, a new tax information-sharing agreement effective September 2018 between Canada and 60 other nations will be crucial in uncovering more tax evasion.
“It’s what I call the show-me game,” Kurland told The Star Vancouver. “You show me what this person declared to you ... as global income and property, and we will show you what this person declared to us as global income and property holdings.”
“It puts people who have not exactly been open with their property transactions in a quandary.”
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However, Kurland noted that while the CRA’s latest findings are “a reasonable representation … I don’t think it tells the whole picture at all.”
The law professional further stressed that while a lot of the scrutiny focused on the market effects of buyers from mainland China, “It is not a one-stop China shop at all. This issue cuts across all jurisdictions internationally.”
China is one of the 60 countries indicated in the new data-sharing agreement.
Chinese demand for Toronto real estate on the rebound
B.C. clamps down on condo flipping and tax evasion