Those of us who dabble from time to time in the conveying of real estate in BC are gnashing our teeth once again as the pointy headed bureaucrats in Victoria have just announced a wee amendment to the mandatory Property Transfer Tax Return, that might just send our clients to jail.
The oft amended PPT form, (29 amendments at last count) which must be completed and filed by all purchasers of BC real estate, will henceforth require the purchaser to certify the residency of the vendor of the property. Failure to accurately report this information could leave the purchaser liable to pay the vendor’s tax bill, and could also land them in jail.
The Provincial government, which mandates the use of the form, for purposes of collecting the property transfer tax, has made the change, not for any reason withing its own jurisdiction, but so that it can pass the information along to CRA, who presumably will then extract the appropriate tax bite from non-resident vendors.
Making non-residents pay their fair share of tax is a laudable objective, for sure, but a few of us can’t help wondering why it should be up to the purchaser to certify the tax status of the vendor, or to take the hit if incorrect information is provided.
For the protection of our clients we have long been in the habit of requiring vendors to swear a statutory declaration that they are not “a non-resident for purposes of the Income Tax Act” , but that document is not filed with the authorities, rather merely tucked into our own file, just in case someone asks if we have done our due diligence. If a foreign vendor were prepared to swear a false declaration on the way to the airport with his unreported gains, there wasn’t much we could do about it.
Placing a positive legal duty upon a purchaser to investigate and then certify the residency of vendor, places an unfair obligation upon a purchaser, who, after all, has no legal right to even delve into the details of a vendors private life.
The pointy heads have picked the wrong party to provide the information they want. In fairness, the obligation to certify a property vendor’s residency status to the government must rest with the property vendor. I for one don’t want to be giving my purchasers a cake with a file in it as a housewarming gift!