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B.C. Moves Forward with Land Owner Registry

B.C. Moves Forward with Land Owner Registry

Proposed land transparency reporting rules appear broader than when they were initially released in 2018

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British Columbia Bill 23, which includes legislation to introduce a new beneficial ownership registry in the province, received first reading on April 2, 2019. Under these new rules corporations, trusts and partnerships will be required to report information about individuals who ultimately hold an interest in property in the province through corporations, trusts and partnerships. According to British Columbia, some information in the registry, including names of all corporate interest holders, beneficial owners or partners, will be publicly searchable. Other more sensitive information may not be public but may be provided to law enforcement and tax enforcement agencies to support tax audit and enforcement. The registry will come into effect by regulation of B.C.'s Lieutenant Governor in Council.

It appears that the British Columbia has generally expanded these proposed land transparency reporting rules since they were first released for public comment in 2018. Specifically, the legislation in the bill extends the meaning of "corporate interest holder" and introduces stricter penalties for non-compliance.

Background
In July 2018, British Columbia set out a framework for the Land Owner Transparency Act in a white paper and draft legislation released for public comment. Among other issues, the draft legislation provided details on the types of information that must be reported by a corporation, a trustee or a partnership that is registered in title to the land. In general, the rules will require all reporting bodies that hold an interest in land for a beneficial owner to file a transparency report during an initial transition period. On an ongoing basis, reporting bodies will also have to file a transparency report:

  • Any time there is a change of interest holders or beneficial owners (even when this does not result in a transfer of legal title to the land)
  • On any application to register an interest land in the name of a reporting body.
    Generally, the transparency report will include:
  • Information about the corporation, trustee or partnership (e.g., names and business numbers)
  • Information about the interest holders in the relevant corporation, trustee or partnership (e.g., name, date of birth, address, social insurance number, tax number, place of residence, date on which the individual became or ceased to be an interest holder)
  • In the case of a relevant trust, information about the settlor of the trust
  • Information about the person completing the report (e.g., name, position, and contact information).

New reporting requirements
Bill 23 contains some notable changes compared to the draft legislation released in 2018 that expands the scope of these requirements. Specifically, the rules now require a corporation to disclose, among other details, identifying information about each individual who, directly or indirectly, owns or controls 10% or more of the shares or otherwise falls under the definition of a "corporate interest holder" (e.g., name, date of birth, address, social insurance number, tax number, and place of residence). Previously, in the white paper, this ownership threshold was originally set at 25%. Since the lowered threshold is applicable to corporations, trusts and partnerships, these reporting rules will result in rules' application to a much broader group.

Where a corporation holds legal title as a nominee or bare trustee for and on behalf of another person who is the beneficial owner, this arrangement would be reported as a relevant trust relationship rather than as a relevant corporation.

The new draft legislation also imposes a duty on reporting bodies to make a written request to an interest holder for information that is required for the purpose of filing a transparency report. Upon receipt of the written request, the interest holder must take reasonable steps to compile the information and respond to the reporting body in writing. Further, the new draft legislation imposes a duty on an authorized individual to certify a transparency report for or on behalf of a reporting body.

The Bill also includes new changes to:

  • Add "enforcement officers" to administer and enforce the new rules
  • Exclude an ownership interest that is contingent on death of another individual
  • Provide an active duty to co-operate and to facilitate the inspection of records and information by an enforcement officer
  • Allow enforcement officers to register liens against real property where a person fails to pay an administrative penalty
  • Expand the prohibition against providing false and misleading information. For more information, contact your KPMG adviser.

Penalties

In addition, Bill 23 expands the administrative and criminal penalties that may be assessed under the new rules—on both the reporting bodies for failure to report and the interest holder for failure to provide information to the reporting bodies.

Reporting bodies failing to report may face an administrative penalty equal to the greater of $25,000 for individuals (or $50,000 for corporations, partnerships, and trusts) and 5% of the assessed property value, and a criminal penalty equal to the greater of $25,000 for individuals (or $50,000 for corporations, partnerships, and trusts) and 15% of the assessed property value.
Interest holders failing to provide information to the reporting body may face an administrative penalty up to $25,000 for individuals (or $50,000 for corporations, partnerships, and trusts), and a criminal penalty up to $50,000 for individuals (or $100,000 for corporations, partnerships, and trusts).

Information is current to April 30, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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