Stringent Non-Compliance Penalties Under B.C.'s New Property Transfer Tax Regime

On Monday, July 25, 2016, the government of British Columbia announced that foreigners who buy residential property in the Vancouver area will have to pay an extra 15% on top of the current property transfer tax. This additional tax will apply to all buyers who are not Canadian citizens or permanent residents, including corporations that are not registered in Canada or are controlled by foreigners. The tax is expected to come into effect on Tuesday, August 2, 2016.

The new legislation also attempts to prevent foreign investors from avoiding the tax by closing loopholes, such as trust arrangements, and announcing significant non-compliance penalties.

The proposed legislation provides that individuals who fail to pay the additional tax or who participate in providing incorrect information to avoid the tax could be liable for fines of up to $100,000 and/or two years in prison. Meanwhile, corporations who fail to pay the additional tax or who participate in