THE BC government announced on Monday that it has launched the Condo and Strata Assignment Integrity Register (CSAIR) to crack down on tax evasion and improve fairness and transparency in B.C.’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 Carole James, Minister of Finance. “B.C.’s housing market needs to work for British Columbians. With this new register, we are leading the country in real estate transparency and taking real action to moderate the condo market. We’re already starting to see results in Metro Vancouver.”
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. Because of a lack of transparency regarding these transactions, it is unknown exactly how many assignment flips occur each year. This new register will put an end to this lack of information, the government said.
Through the secure online register, developers can add developments and add or file assignments. This information will be gathered securely by the developer. The information that must be reported includes 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 first quarterly assignment report, for January 1 to March 31, 2019, is due to government April 30.
The B.C. government will use this information to ensure that people who assign condos are paying the appropriate income tax, capital gains and property transfer tax. 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 by creating another tool for transparency and closing tax evasion loopholes in the real estate market,” said James Cohen with Transparency International Canada and Canadians for Tax Fairness. “We hope to see the B.C. government continue this very important path of 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 B.C. government’s 30-Point Housing Plan to address housing affordability. In just one year, government has taken the following actions to address tax fraud and close loopholes in the real estate market:
* convened an expert panel on money laundering in real estate to consult the public and identify systemic risks that leave the real estate and financial services sectors open to money laundering;
* started work to end hidden ownership by bringing transparency to beneficial ownership, corporations and trusts in B.C., and consulted the public on draft legislation;
* updated the property transfer tax return to uncover beneficial owners behind corporations and trusts;
* enacted legislation to allow information sharing on the homeowner grant with federal tax officials to improve tax enforcement;
* strengthened property transfer tax auditors’ ability to take action on tax evasion; and
* established a federal-provincial working group on tax fraud and money laundering.
* 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.
* The Land Title and Survey Authority administers the online register.
* The filing fee per assignment is $195, which is a small fraction of the cost of an assignment.
* As is standard practice, the Ministry of Finance consulted the Office of the Information and Privacy Commissioner regarding the reporting requirements.
* Developers will need a myLTSA Enterprise account by March 31, 2019, in order to use the register.