On Tuesday the BC Government introduced the Land Owner Transparency Act, which would establish a public registry where the “beneficial owners” of corporations, trusts and partnerships would be required to disclose their identities.
The registry is intended to drill through the levels of secrecy and anonymity that could surround corporate ownership of property through numbered companies, offshore trusts, blind trusts and corporations. Examples include when land is owned by one numbered company, which is controlled by another numbered company, even though both companies are owned by the same person.
“The registry will make information about the true owners of BC real estate publicly available and help crack down on illegal activities.” says BC Finance Minister Carole James. “It is one of the key steps our government is taking to ensure homes in BC are used for people, not speculative investment or money laundering.”
Failure to disclose ownership in the public registry could mean fines of up to $100,000 or 15 per cent of the assessed property value.
If the enabling legislation passes, the new registry would be online by 2020. It would be publicly searchable and contain the names of all corporate interest holders, beneficial owners or partners. Tax authorities, law enforcement agencies and relevant regulators would have access to more detailed information and use the registry to crack down on tax evasion, fraud and money laundering.
As well the BC Government is introducing amendments to the Business Corporations Act requiring private companies to hold accurate and up-to-date information about the true owners of their shares, and eliminating bearer shares, which are unregistered shares owned by a certificate holder.
Why is this needed?
The Province has been promoting various measures to reduce tax invasion and money laundering through real estate which it is believed has helped to drive housing prices to unprecedented highs. Other measures taken include:
- A law to track pre-sale condo contract assignments which came into effect on January 1, 2019.
- Sharing homeowner grant information with federal tax officials
- Strengthening property transfer tax auditors’ abilities to act on tax evasion
- A Speculation and Vacancy Tax.
The province has also declared its goal of helping to launch a federal-provincial working group to address tax fraud and money laundering.
BC’s measures have the endorsement of the Union of BC Municipalities whose 2018 housing report, A Home for Everyone, specifically urged governments for strategies to reduce speculation and tax evasion – including declarations of home ownership; better data collection and sharing; and a collaborative approach by governments to improve housing affordability.