The Canada Revenue Agency (CRA) is planning a crackdown on real estate-related tax cheating in Vancouver, according to a report in a Hong Kong newspaper. The move could put a damper on the city’s frenzied real estate market, where many have attributed double-digit house price growth to an influx of illicit foreign money.
The South China Morning Post says it has obtained leaked documents from the CRA showing it plans to deploy 50 auditors who will “review the top 500 highest risk files within our region.”
“It’s a secret tax crackdown on real estate deals in Vancouver related to foreign money,” Ian Young, the reporter behind the story, told News1130 in Vancouver.
The documents reportedly state the crackdown was launched because of “significant media attention” given to potentially shady dealings involving foreign home buyers in Vancouver. Media have noted some suspicious transactions in Vancouver amid the city’s real estate frenzy, such as a $31.1-million mansion owned by an individual whose career was listed as “student.”
The CRA documents mention a Vancouver home that was sold for $5.8 million and whose owner claims the Working Income Tax Benefit for low-income earners.
No allegations of wrongdoing have been made against these homeowners, but the CRA documents state the agency will scrutinize “individuals living in high-valued areas in B.C. who are reporting minimal income not supporting their lifestyle.”
The crackdown could cast a wide net, looking not only at foreign buyers but local ones as well. On top of unreported income from outside Canada, the auditors will look at income from property “flipping,” under-reporting of capital gains from home sales, and under-reporting of the GST on sales of new homes.
See the original article from the Huffington Post here.