Taxman in Canada becoming aggressive with tax evasion in Real Estate Market of Toronto and Vancouver
VANCOUVER—In hot real estate market of Toronto and Vancouver property owners are trying to trick Canada Revenue Agency all the time,but for more than last 2 years Canada’s taxation authority has become too aggressive to root out tax evasion, says an estate and tax planner.
Jamie Golombek, Managing Director at CIBC, Toronto said that people in some cases are lured by the prospect of making quick and easy money. “This temptation is not to inappropriately report or to report.”
CRA recently reported that this has been identified around $600 million in unpaid taxes from Ontario and British Columbia real estate sector from audits which had been conducted over last 3 years. Agency also warned that there continues to be the “compliance risks,” especially in Toronto and Vancouver.
According to agency, transactions in Real Estate Market of Toronto and Vancouver have gone under “scrutiny for some years,” but this only has “been actively auditing and monitoring real estate transactions in British Columbia.”
There is a marked difference between type of tax evasion that CRA found in British Columbia and Ontario. In B.C., 45% of unpaid taxes came not properly from reporting income, whereas in Ontario, majority of unpaid tax i.e 90% came not paying from GST on improperly or new buildings applying for GST rebate.
Golombek said that when this comes to the income tax, property owners are getting into number of troubles because they are not reporting capital gains which are made from flipping of property.
People who sell out their principal residence don’t have to pay out capital gains tax; all those who sell out a rental property or vacation will likely to pay 50% of capital gains; but if you buy condo or property pre-sale contract with intentions of flipping assets quickly for profits, sellers must pay income tax on 100% of capital gain.
Golombek said that there’s really a fine line between those 3 categories, with number of property owners who try to attempt to declare a flipped property like their principal residence.