With files from Jon Meyer
Just how does the Canada Revenue Agency address non-compliance in the real estate sector?
In light of another bombshell report on Vancouver’s real estate market suggesting that some foreign investors profit in buying homes in B.C. while evading taxes, our National Revenue Minister asked the Canada Revenue Agency to look into the actions of real estate speculators here.
At the same time, the CRA updated its information on taxes and how they punish tax dodgers.
On their website, the CRA says they have doubled effort levels focused on the B.C. real estate sector.
From April 2015 to June 2016, the CRA completed 2,592 income tax and GST/HST audits related to real estate in Ontario and here in British Columbia.
The CRA also reviewed 10,537 rebate claims.
They handed out $11.6 million in penalties against tax cheats.
The CRA also says it started a review of 500 high dollar value real estate transactions in B.C. last year to uncover any shady tax issues yet to be uncovered.
What are the key areas of compliance risk in the real estate sector?
The CRA says there are five main areas of concern:
- questionable source of funds
- property flipping
- unreported goods and services tax/harmonized sales tax (GST/HST) on the sale of a new or substantially-renovated property / GST/HST new housing rebate
- unreported capital gains
- unreported worldwide income
The Agency says transactions in the Greater Toronto Area have been the subject of greater scrutiny, including audits, for some years. More recently the CRA has been actively monitoring and auditing real estate transactions in British Columbia.
The CRA will apply a penalty equal to 50 per cent of the additional tax payable if a taxpayer knowingly makes a false statement when filing a return.
During the period of April 2015 to June 2016, the CRA applied 563 penalties.
The highest penalty was almost $2.5 million.