A B.C. Supreme Court has put Realtors, Notaries and Lawyers on notice to accurately and honestly report clients actual residency status. Foreign buyers have previously stated that they are Canadian residents which allowed them to avoid paying the applicable Capital Gains Tax to Revenue Canada. Apparently this requirement has not been seriously enforced even though the it is a requirement under the Tax Act. Now, with this ruling, Revenue Canada has reclaimed its right to tax non-residents on any profit from real estate transactions.
This case involved a Vancouver notary, Tony Lui who has been ordered to pay Revenue Canada $600,000 for failing to adequately determine the residency status of his client who had purchased a home for $5.5million. Revenue Canada now wants 25% capital gains tax from non-resident sellers on the profit realized from the sale of Canadian property. Mr. Lui is deemed responsible and is now on the hook for the $600,000 for not doing his due diligence.
Expect more oversight, forms and disclosure requirements from Realtors, Notaries and hopefully Lawyers as a result of this case and an ever expanding government bureaucracy to back it up. Seems like there's a repetitive theme here particular with the influx of foreign investors in recent times.