Foreign-Buyer Tax Gets an Upgrade
Premier Christy Clark said in January that she wanted to exempt people with work permits who were living and paying taxes in B.C. On Friday, March 17, 2017, Clark and Finance Minister Mike de Jong announced their decision, which includes an exemption to immigrants arriving under the provincial nominee program. The exemption takes effect immediately and is retroactive to when the tax was introduced in August 2016.
De Jong also announced a rebate to the 15-per-cent tax for foreign nationals who obtain permanent Canadian residency within a year of buying a home, so long as they have lived in that home for at least a year.
So what does this mean?
The Finance Ministry expects 500 to 800 nominee-program buyers will apply for the exemption and 20 to 30 new permanent residents, which will cut the province’s take from the tax by $1 million to $3 million for the first year of the tax. For 2018-19 and onward, it estimates the measures will apply to between 100 and 200 applicants at a cost of between $10 million and $20 million.
Clark said the changes were designed to make sure the province can recruit skilled workers and entrepreneurs that the economy needs to expand, particularly the tech sector.
“Our growing tech sector depends on the provincial nominee program, and that’s why we’re removing barriers, so they can get to work, create jobs, and help build B.C. British Columbia has always welcomed the world’s best and brightest, where they find a place that embraces them,” Clark said in the news release.
On Friday, Mike de Jong said,
“Together with other housing affordability initiatives introduced by the provincial government, the additional property transfer tax has helped moderate prices and create the conditions that are allowing housing supply to catch up to demand,” he said in a news release. “We are now in a position to provide targeted relief to help ensure our province continues to attract skilled workers and entrepreneurs who want to invest and start businesses here.”
Crafting the exemption for the provincial nominee program was the right thing to do, said Tom Davidoff, a professor with a specialization in housing at UBC’s Sauder School of Business.
“It’s hard to fake a (nominee-program application),” Davidoff said. “You can’t slide a student in to get a whole family off the tax, it’s really someone who has come here, has reason to be here and the province wants to be part of the workforce.”
NDP housing critic David Eby still has concerns that these changes won’t close loopholes that allow foreign buyers to buy condos through so-called pre-sales then sell the contract before the purchases close without paying the tax, even if they make a profit flipping the contract.
Eby said the opposition warned government that the tax would unfairly hit people living, working and paying taxes in the province and Friday’s measure simply fixes that.
“So they’re halfway to an effective tax regime, but they’re not quite there,” Eby said.
“It will ultimately be an election issue now, not a legislature issue,” Eby said.
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