Description: The BC government has stated it intends to crack down on a tax loophole that appears to be allowing foreign investors to escape paying property transfer taxes in a red-hot real estate market. An investigation by the Globe and Mail revealed the disturbing news that some foreign investors were using trusts or transferring property into relatives’ names to avoid tax. On the federal taxation side, the Canada Revenue Agency is investigating these real estate transactions as well. A BC immigration lawyer, Sam Hyman, told the Globe and Mail that “Canada has the reputation of being very soft on tax evasion, money laundering and vigorous enforcement of its tax code.”

Source: Globeandmail.com

Date: October 7, 2015; updated October 8, 2015

Link: http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/bc-pledges-to-close-loophole-that-allows-some-real-estate-investors-to-dodge-taxes/article26713509/

Discussion Points:

1) What do you think of Mr. Hyman’s comments about Canada being soft on tax evasion and enforcement of taxation law?

2) What techniques might CRA auditors be using to identify possible transactions where foreign investors are avoiding paying tax on property transfers?

3) What are the determinants of residency under Canadian taxation law?