Tuesday 13 September 2016

Canada Revenue Agency probes tax loopholes in real estate speculation

Tax agency has stepped up its monitoring of B.C. and Ontario housing markets

News Courtesy CBC News Posted: Sep 13, 2016 10:37 AM ET Last Updated: Sep 13, 2016 4:31 PM ET
The Canada Revenue Agency is looking deeper into tax evasion in some of the country's hottest housing markets after reports suggesting many speculators are abusing the system and not paying enough tax on their gains.
The move comes after a Globe and Mail report last week on a Vancouver property speculator who paid virtually no tax on gains from millions of dollars worth of home flips during the same calendar year.
"Like all Canadians, I am very concerned over allegations that some wealthy Canadians are not paying their fair share of taxes," Diane Lebouthillier, minister of national revenue, said in a statement. "That is unacceptable and I've since asked Canada Revenue Agency officials to look into the specifics of the case."

Frothy market

Foreign money in Canada's housing market has been a hot topic of late, as policymakers seek to get rid of some of the excess speculation without starting a panic. The province recently implemented a 15 per cent tax on foreign buyers in the Greater Vancouver Area, and the issue of the capital gains exemption on a primary residence has also drawn scrutiny from the CRA and other agencies.
Lebouthillier said that between April of last year and June 2016, the CRA had conducted 2,500 audits related to real estate in British Columbia and Ontario, and levied some $11.6 million in penalties to tax filers who were subsequently found to have demonstrated "gross negligence in failing to report their tax obligations correctly."
"Those trying to avoid paying their tax obligations now face an increasing likelihood of getting caught," she said. "Canadians expect and deserve a fair tax system and that is what we are committed to delivering."
Prime Minister Justin Trudeau addressed the topic of tax leakage in the housing market later on Tuesday afternoon, when asked by a journalist at a press conference for his thoughts.
"One of the issues that we highlighted recently is the need for continued enforcement of the tax code and making sure that we're cracking down on people who are avoiding paying their fair share of taxes," he said, adding that the government earmarked more than $400 million in the last budget to beef up the CRA's ability to "make sure that there is better enforcement [so that] everyone pays their fair share of taxes."

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