Calling it the first of its kind in Canada, the BC government announced on Monday that it has launched a new registry that takes aim at tax evasion and seeks to improve transparency in BC’s real estate market.
“For too long, speculators and tax evaders have been taking advantage of loopholes in our real estate market, driving up prices and shutting British Columbians out of the market,” said BC Finance Minister Carole James. “With this new register, we are leading the country in real estate transparency and taking real action to moderate the condo market.”
In a release, the province said it is “widely acknowledged” that the practice of pre-sale flipping has been a factor in driving up real estate prices while facilitating tax evasion.
A contract assignment is when a buyer sells, or “flips,” their purchase contract of a condo unit to another buyer, prior to completion of the building.
Currently, a buyer can flip their assignment to another buyer for a higher price than they paid for it without any oversight.
“Because of a lack of transparency regarding these transactions, it is unknown exactly how many assignment flips occur each year,” the province said. “This new register will put an end to this lack of information.”
Through the secure online register, developers can add developments and add or file assignments, and information will be gathered securely by the developer. The information that must be reported includes the identity and citizenship of all parties to the assignment.
Developers are required to collect and report comprehensive assignment information through the register and file the report quarterly. The filing fee is $195 and the first quarterly assignment report – for January 1 to March 31, 2019 – is due to government on April 30.
Developers will need a myLTSA Enterprise account by March 31, 2019, in order to use the register and the province said it will use this information to “ensure that people who assign condos are paying the appropriate income tax, capital gains and property transfer tax.”
In addition, the government noted that information gathered through the platform will inform future housing and tax policy.
“The condo and strata assignment register is a step in the right direction,” said said James Cohen with Transparency International Canada and Canadians for Tax Fairness. “We hope to see the BC government continue… shining a light on real estate, particularly bringing transparency to anonymous beneficial owners of corporations and trusts, so they are not a soft target for tax evaders and money launderers.”
The register is one part of the BC government’s previously announced 30-Point Housing Plan to address housing affordability.