CRA Collects More than $1 Billion After Cracking Down on Real Estate Tax Evaders
May 31, 2019written on behalf of Feigenbaum Law
We’ve often blogged about tax issues pertaining to real estate, including the fact that fewer home buyers are purchasing homes in Toronto, Vancouver and other hot markets after the introduction of Foreign Buyers’ Taxes and other measures, how buying property from a non-resident of Canada can have significant tax implications, as well as the tax consequences of owning a cottage, among others.
Now, the Star is reporting that the Canada Revenue Agency has recovered more than $600 million in Ontario and more than $420 million in British Columbia over the last four years from individuals who knowingly made false statements on their tax returns and who engaged in other forms of tax evasion.
- A federal mortgage stress test;
- The previously mentioned provincial speculation taxes;
- Vancouver’s empty homes tax and increased property tax on homes worth over $3 million;
- The newly created provincial registry in B.C. which requires condo developers to record condo pre-sales.
CRA Audits
In addition to the above-mentioned measures intended to cool down rapidly escalating prices, CRA auditors have also been placing increased focus on taxpayers in these two jurisdictions since 2015.
The CRA uses various methods to identify potential tax evaders. Some red flags that invite CRA scrutiny include:
- Individuals whose reported income does not match their lifestyle (e.g. low reported income but an expensive home);
- Property flippers who do not report their full profit, or do not report any profit as either a capital gain or business income.
The 2019 federal budget allocated $10 million towards a real estate task force devoted to tax evasion in real estate. The force will initially continue its focus on Vancouver and Toronto, with the goal of expanding.
How Can Feigenbaum Law Help?
We will continue to follow any and all developments in this regard and will provide updates as more information becomes available. In the meantime, if you have questions about personal tax planning, including tax planning as it relates to major assets such as real estate, contact Feigenbaum Law.
Our goal is to create the best tax strategy possible for our clients. We work with you to create a personalized solution that will streamline your compliance requirements.
Our focus is complex matters related to tax planning for individuals with high net-worth. We offer services to clients in the US, Canada and around the world.
Contact us to learn more about how we can help or call us at (416) 777-8433 or toll free at (877) 275-4792.