Recently, The Globe and Mail began an investigation into tax loopholes and “lax oversight” which allow both foreign and local real estate speculators to dodge taxes in metro Vancouver. Yesterday, B.C. Finance Minister Mike de Jong formally called on the Canada Revenue Agency to crack down on these tax-dodgers.
As part of his statement: “Like all taxpayers, I am concerned about allegations that some are not paying their share of taxes. For Canadians to have confidence in the tax system, the CRA must diligently enforce the law. I have and will continue to communicate this expectation to Finance Minister Bill Morneau and the federal government.”
Consider Kenny Gu, a local real estate speculator who buys and sells homes worth millions of dollars in a process known as “flipping.” Gu paid little to no taxes in 2015 and reported under $46,000 in personal income despite millions of dollars flowing through his corporate and personal bank accounts, according to records obtained by The Globe. He’s believed to be part of a network of speculators who benefit from Canada’s principal residence exemption, which means they pay no sales tax for homes they did not occupy themselves.
Such business practices as Mr. Gu’s will be investigated further by provincial regulators, according to Mike de Jong. “British Columbia’s real estate and financial regulators are also interested in the allegations raised in the story,” he said. “Canada’s finance ministers discussed concerns about tax auditing and potential money laundering in real estate at their June meeting in Vancouver. Provincial officials have also discussed B.C.’s ongoing concerns through the federal‐provincial‐municipal working group on housing affordability.”