Ephraim Vecina
Canadian Real Estate Wealth
In a recent announcement, the Canada Revenue Agency revealed that it has collected more than $240 million from real estate tax audits in B.C. and Ontario as of last month.
Data published on the CRA website showed that between April 2015 and September 2016, the agency has recovered over $210 million in Ontario and $30.3 million in B.C., The Huffington Post Canada reported.
The CRA probe—which looked into house flipping, unverified fund sourcing, unreported income, unreported taxes/capital gains, and tax rebates on any homes sold—came amid censure from various quarters over the agency’s alleged neglect to investigate money laundering and tax evasion in Canadian real estate.
CRA stated that the recovered money in Ontario mostly originated from audits on rebates. Meanwhile, the B.C. funds predominantly came from GST/HST audits, with around $7.1 million recovered each from income tax and rebate investigations.
In addition, approximately $12.5 million in penalties have been levied upon individuals from both provinces on grounds of knowingly making false statements in the filing of tax returns, with the highest individual fine at $2.5 million.
While much discussion has revolved around the purported effect of foreign buyers on Canadian home prices, several observers have argued that money laundering in the country’s residential real estate segment merited more attention.
In a housing rally in downtown Vancouver last month, Certified Financial Crime and Anti-Money Laundering Specialist Christine Duhaime stated that the national government needed to address the issue head-on.
“I would like to suggest the federal government convene an inquiry into whether or not there is a financial crime problem in the real estate sector of Vancouver and what can be done to resolve it,” Duhaime said.
UBC professor Paul Kershaw agreed, noting that the proliferation of illicit financial activity represented a perfect opportunity for the government to resolve B.C.’s housing problems once and for all.
“The anger and frustration is coming together in constructive ways to entice all political parties left, right and centre to say homes first has to be the principle around which they organize their platform heading into the next provincial election,” Kershaw said.
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