Property sellers using loophole to dodge B.C.'s transfer tax

小股民

Critics say a growing number of businesses or wealthy individuals are exploiting a loophole to avoid paying B.C.'s tax on property transactions while average home buyers are stuck footing the bill.

The Property Transfer Tax consists of one per cent charged on the first $200,000 in property value and two per cent after that – adding up to an extra $10,000 in tax when a $600,000 Metro Vancouver home changes hands.
                                                        
But businesses in particular are making growing use of what's called a "bare trust" corporation to hold ownership of a property.

The trust can be transferred to a new buyer without any change in the land title owner and no PTT is triggered as a result.
                                                        
"The loophole is big enough to drive trucks through," Canadian Taxpayers Federation (CTF) B.C. director Jordan Bateman said.

"Accountants are all over it, especially corporate ones. It's becoming standard tax practice and that tells you people are taking advantage of it."
                                                        
On a big commercial or industrial property sale, the savings can be significant and Bateman guesses the provincial government may be losing out on $15 to $25 million a year it should be collecting.
                                                        
"If you captured some of that would you be able to trim down the overall Property Transfer Tax rate to make it easier for everyone?" he asked.
                                                        
Exactly how much is being lost to the loophole is hard to determine.
                                                        
Data obtained by the CTF through Freedom of Information show business and industry made up a declining share of the taxable transactions and PTT collected from 2006-11.
                                                        
By 2011, residential properties made up 80 per cent of the $927 million in PTT collected – up from less than 70 per cent in 2006.

Just 291 industrial property transactions were taxable in 2011 (down from 1,041 in 2006) and resulted in PTT payments of $9.7 million, or one per cent of the total.
                                                        
Business property sales totalled 2,334 (down from 4,276 five years earlier) and contributed $67.1 million, or 7.2 per cent.

Residential transactions also dropped after the 2008 recession and Bateman said they should outnumber the other categories.

But he said the residential share still looks "awfully high" to him.
                                                        
It's not impossible for residential property owners to use bare trusts, but Bateman thinks it's rare.
                                                        
Finance Minister Mike de Jong said in a statement the province is aware bare trusts can be used to dodge the PTT.
                                                        
"While it has not yet been determined that a remedy is required, it may be challenging to design a remedy that doesn't have other, unintended consequences," de Jong said.
                                                        
NDP finance critic Bruce Ralston said he's aware of the manoeuvre but isn't sure how prevalent it is.
                                                        
He said the NDP has no plans to attempt to plug the loophole.
                                                        
"I'm not sure how effective it would be," Ralston said. "Sometimes when you put in anti-avoidance measures, people try other anti-avoidance measures."
                                                        
Bateman said the bare trust loophole underscores his position that simpler tax systems are generally better.

By Jeff Nagel - Surrey North Delta Leader

Published: April 16, 2013 10:00 AM                                                        

小股民

卑詩物業買家可透過「簡易信託」漏洞逃避轉讓稅，令省府造成損失。圖為大溫一處物業掛牌出售。資料圖片

• 星島日報記者報道
  
  預設信託戶口  鑽法律漏洞
  有稅務專家指出，卑詩省不少物業買家透過法例漏洞，逃避繳付物業轉讓稅（Property Transfer Tax），令省府每年損失約2,500萬元。省財政廳長兼議會領袖麥德莊（Mike de Jong）表示，省府已經留意到漏洞的存在，但暫時仍未決定是否要修改現行法例以打擊逃稅者。
  逃避物業轉讓稅的手段是通過設立辦理「簡易信託」（bare trust）。本地華裔律師李溢解釋說，「簡易信託」手續是：當A賣家出售一物業前，先與B買家簽訂一份協議。協議會規定A成為信託人，但仍擁有物業所有權，而B則變為實益擁有權者（beneficial ownership）。
  
  物業所有權始終沒變
  在卑詩省現行法例中，物業轉讓稅只需當物業所有權從一方轉至令一方時才須支付；而在「簡易信託」逃稅手法中，物業所有權從始至終均在賣家手中，未曾發生改變，因此無須繳稅。
  加拿大納稅人聯盟（The Canadian Taxpayers Federation）卑詩總監貝特曼（Jordan Bateman）表示，目前物業轉讓稅的法例漏洞很大，已成一種趨勢；預計省府每年為此損失1,500萬至2,500萬元。
  麥德莊指出，省府已留意有人逃避支付物業轉讓稅問題，但暫未決定是否修改漏洞，改變現行法例可能具有一定難度。