Housing unaffordability in Canada, and especially in B.C., has reached disturbing levels in the past few years. Part of the reason for this is because tax evasion along with money-laundering have been putting upward pressure on real estate prices, making it difficult for most residents to find a home that will fit their budgets.
Several initiatives are unfolding in an effort to discover loopholes and to combat the infiltration of dirty money in the real estate sector.
B.C.’s Real Estate Backdrop
The housing affordability issue is particularly predominant in B.C. Despite a drop in prices following new regulations such as the speculation and vacancy tax and the mortgage stress test, the British Columbia real estate markets are still unaffordable.
The prices in Vancouver real estate continue to surpass the $1 million mark, making it the most expensive market in North America. Anti-corruption organization Transparency International analyzed the city’s 100 most valuable property deals in 2015 and found that the ownership of almost 50% of them was masked in some way.
New Legislation for B.C. Property Owners
This Tuesday, the B.C. government introduced a law called the Landowner Transparency Act aimed at tackling tax fraud and money-laundering in the province. The legislation is designed specifically for large businesses and compels them to disclose their land possessions. Finance Minister Carol James stated for CBC:
“It will require corporations, trusts and partnerships to be able to include the information around who is an owner of the land, just as citizens do when they register (at the land titles office).”
In the long run, the proposed act aims to create the country’s first public registry of property owners, which will shed light upon anonymous ownerships hidden by shell corporations as well as numbered companies.
Tax authorities, law enforcement agencies and regulators will thus have access to more accurate information, based on which they will be able to find better ways of fighting against illegal activities.
Increased Anti-Money Laundering Funds
Overall, Canada will invest most of its anti-money laundering funds in British Columbia to address illicit money being infiltrated in real estate. Minister of Organized Crime Reduction Bill Blair declared for the Globe and Mail:
“[B.C.] is a priority for the dedication of resources and effort to respond to these challenges.”
The federal budget announced a yearly increase of $29 million for this. Along with the RCMP and the country’s financial-intelligence watchdog, the resources will also be spent on creating a new expert task force that will investigate the issue.
An additional $50 million will be allocated to the Canada Revenue Agency over the next five years with the purpose of establishing four new residential and commercial real estate teams. Their mission will be to audit high-risk regions, such as British Columbia.
Detailed Reports Coming Soon
Last year, B.C. announced a twofold initiative to fight against money laundering and tax evasion in the real estate sector. This initiative involved the release of two reports that would give a more thorough understanding of the illegal activities that are taking place in the province.
One report is from a panel chaired by Maureen Maloney, criminal law expert and professor at Simon University, and the other is from Peter German, former Deputy Commissioner of the RCMP and the Correctional Service Canada (CSC).
These reports have been handed in recently. The government is currently analyzing them and will make them public at a later date.
As more of the puzzle pieces come together, we can expect to see improvements and further steps taken that will ease the burden of money laundering and tax evasion in B.C and all of Canada.