The one thing that the provincial government doesn’t want to talk about when it comes to our crazy real estate market is money laundering.
They talk real estate regulations, empty homes, lack of supply – you name it. But the topic of money laundering and its influence has been remarkably absent from the provincial government’s response to the escalating housing crisis.
Yet for most people paying attention to all of the stories about Vancouver real estate and foreign-money, it’s a very hot topic.
Now, it appears the issue has not gone entirely unnoticed at the federal level, that’s according to an exclusive story by South China Morning Post reporter Ian Young.
Shadow-flipping, bulldozing high-end houses, claiming the Working Tax Benefit while owning a $5.8 million house…
They’re all examples listed in documents leaked to Young, who says he was contacted by a Canada Revenue Agency employee who shared information and a document about a secret crackdown on foreign-money real estate deals in Vancouver.
“They’ll be getting 50 auditors who’ll be looking at global income of people who declare low incomes in Canada but buy very expensive houses. They’ll also be looking at issues like flipping, and trying to determine whether people who avoid paying capital gains tax on those homes by saying it is a principal residence – whether or not it is in fact a principal residence.”
LISTEN to the full interview with Ian Young:
Fifty auditors appointed, according to the leaked document
Young says the CRA employee who provided the information to him appeared dubious of the effectiveness of the audits.
“In their opinion, even fifty auditors on this case only represents a very small number compared to the scale of the problem. These are pretty extensive audits that take more than a month each, so probably we’re looking at around 500 or 600 audits per year in the Vancouver region. Now according to this employee, that doesn’t reflect the true scale of the problem.”
He says the document also revealed that in past year before this crackdown, there had only been one successful audit of global income in Vancouver.
“The taxpayer was forced to hand over an extra $27,000. But that’s really quite pitiful compared to the scale of the situation where Vancouver has a lot of people who have households here, but still earn their livings elsewhere outside of Canada.”
Why was this crackdown being kept a secret?
Young says he was told by his source that there was a fear among the tops levels of the CRA, as well as beaurocrats here in Vancouver, that they would be perceived as racist if they cracked down on global earnings.
“Because quite clearly, I think, that most of the suspicious cases that relate to global foreign earnings relate to recent wealth immigration, which relates to recent Mainland Chinese immigration.”
But other countries do this….
Young says he’s not sure why people are so worried about doing something like this.
“Certainly within the Chinese communities that I inhabit there is very, very little tolerance for rich tax cheats.”
He says now that it’s been made public he hopes there’s more attention on it, because he sees it as a widespread problem.
“We had, last year, some data that came out which showed there are 25,000 households in Vancouver, almost 10% of households, where declared income for that household is less than their actual housing costs. That points to this major problem that we have with undeclared global income.”