B.C.’s budget introduced a new exemption for the 20% foreign buyer tax
British Columbia's 2020 budget includes a new exemption from additional property transfer tax (i.e., the "foreign buyer tax") for certain partnerships. This change comes as a welcome relief to taxpayers and is intended to ensure qualifying Canadian-controlled limited partnerships are treated in a manner consistent with Canadian-controlled corporations.
The draft legislation and effective date for the new exemption have not yet been released. The new legislation will likely introduce a new concept of a qualifying Canadian-controlled limited partnership, for which there is no equivalent in the Act.
Under current legislation, the 20% foreign buyer tax generally applies to certain transfers of residential property located in specific geographic areas within the province. Specifically, it applies where the transferee is a foreign national, a foreign corporation or a "taxable trustee" (i.e., a trust with a foreign national or foreign corporation as trustee or beneficiary). A foreign corporation is defined for this purpose as a corporation not incorporated in Canada, or a corporation that is incorporated in Canada but is controlled directly or indirectly by foreign entities (unless the corporation's shares are listed on a Canadian stock exchange).
The current rules do not explicitly address how the foreign buyer tax applies to a transferee that is a partnership. As a result, it can be challenging to apply the existing the legislation to situations where a partnership has any foreign investors.
For more information, contact your KPMG advisor.
Information is current to February 25, 2020. 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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