Friday 6 April 2018

Everything You Need To Know About the Provincial Government Tax Changes

Speculation Tax

After hearing from cottage owners around the province, Finance Minister Carole James sent her government's new speculation tax, announced in Budget 2018 and slated to come into effect in September, back to the drawing board.
On March 26, 2018 she announced changes saying the new tax will now specifically target only speculators - those who "treat our housing market like a stock market, leaving homes vacant and driving up prices,” said Minister James.
Under this latest version of the speculation tax, more than 99 per cent of British Columbians and other Canadians who own vacation cabins and cottages on lakes and Gulf Islands won’t pay the tax, according to Minister James.

Geographic areas

Once implemented, the tax will now apply to:
  • Metro Vancouver;
  • The Capital Regional District (excluding the Gulf Islands and Juan de Fuca);
  • Kelowna and West Kelowna;
  • Nanaimo-Lantzville; and
  • Abbotsford, Chilliwack and Mission.
Here is a map of the areas.


In 2018, the tax rate for all properties subject to the tax is 0.5% of the property value.
In 2019 and subsequent years, the tax rates will be:
  • 2% for foreign investors and satellite families;
  • 1% for Canadian citizens and permanent residents who do not live in British Columbia; and
  • 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family).

Exemptions/tax credit

Owners of primary residences, and property that is a qualifying long-term rental, are exempt from the tax.
A long-term rental is considered a property that’s rented out for at least six months out of the calendar year in increments of at least 30 days. In 2018, as part of the transitionary phase, a long-term rental is considered a property rented out for three months of that year.
British Columbians with vacant second homes will be eligible for a non-refundable tax credit that’s immediately applied against the speculation tax.
This tax credit will offset a total of $2,000 in speculation tax payable and ensures British Columbians do not pay tax on a second home valued up to $400,000.

Special case exemptions

These include:
  • The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility.
  • The owner or tenant is temporarily absent for work purposes.
  • The registered owner is deceased, and the estate is in the process of being administered.


BC Budget forecasts revenue of $200 from this tax. The amount isn’t expected to change.

Foreign Buyer Tax 

The tax on foreign nationals, who are not permanent residents of Canada, has been increased to 20%. It applies to Metro Vancouver, Fraser Valley, Capital Region, RD of Nanaimo and Central Okanagan RD.  It is effective immediately with an exemption for contracts written before February 20, 2018 with a closing date before May 31, 2018

Property Transfer Tax 

The Property Transfer Tax will increase on properties over $3million from 3% to 5% on the portion that is over $3million

Hidden Ownership 

Additional information on beneficial ownership of corporations will be required on property transfer forms. A registry of all beneficially-owned property will be established and publicly available. Corporations will be required to hold accurate information on all beneficial owners.

Tax Fraud

The Provincial government will collect information on pre-sales and assignments of contracts from developers. This database will be shared with provincial and federal tax authorities to insure compliance.

No comments:

Post a Comment