Speculation tax enforcement no big issue, expert says

VANCOUVER (NEWS 1130) – British Columbia’s new homeowner speculation tax might not be as hard to enforce as some may think, according to a public policy expert.

The province will enforce the tax by conducting random audits, looking at data such as rental agreements, income taxes, and where people pay their taxes with the information provided by homeowners such as their social insurance number.

“We’ll have audit teams who will do random audits to check,” Finance Minister Carole James said. “They’ll be looking at things like rental agreements, the information that’s there, where people pay their taxes.”

Josh Gordon, an Associate Professor in Public Policy at Simon Fraser University told NEWS 1130 he doesn’t think the audits will target just anyone.

“The audits will be relatively random from within a pool of properties that are red flagged,” he said. “By connecting income tax data with property values, they’re going to be able to see those cases that have sharp disparities and they will target their initial audits at the places with the greatest disparities.”

Anyone who claims they are renting out the property will also have to claim rental income, Gordon said.

The B.C. Liberals have consistently opposed the tax, but also believe the collection of personal information from homeowners is a violation of their privacy.

“I trust British Columbians. I think that they provide the information that’s required. What I’m more concerned about is that people had to provide that information in the first place,” Liberal Finance critic Shirley Bond said. “So many British Columbians wrote to the Privacy Commissioner and said ‘We’re not comfortable providing our email addresses and social insurance number.’ Now the government has a database.”

The tax applies to all non-primary residences left vacant for more than six months of the year. In the 2018 taxable year, it is 0.5 per cent of the home’s assessed value, but rises to two per cent for overseas residents and satellite families in 2019.

A satellite family is a person or family where the majority of their total worldwide income for the year is not reported on a Canadian tax return.

Gordon says there could still be some improvements to how the province handles satellite families.

“I think moving forward they’re going to have to be closely monitoring the situation around partial rent exemptions for satellite families and the ability for some families to get an exemption if they rent part of their property,” he said. “That could involve some evasive behaviour and they will need to watch that closely.”