‘Zero tolerance’ for tax evasion, Ottawa claims
Report on ‘poor’ neighborhoods full of mansions sparks calls for tax enforcement, residency documentation
OTTAWA — The Canadian government takes a “zero tolerance” stand on tax evaders and is currently conducting audits on property owners in B.C., according to the Canada Revenue Agency.
But Vancouver immigration lawyer Samuel Hyman said neither the federal nor B.C. governments are doing enough to crack down on people who pay sky-high prices for Canadian houses but don’t pay taxes on their global income.
That goes for both overseas property owners who are avoiding taxes legally — by becoming non-residents for income tax purposes, for example — and for those residents acting outside the law by not reporting global income, Hyman said.
He was responding to a Vancouver Sun report Monday regarding the upscale Richmond neighbourhood of Thompson, which has both a high number of mansions and an unusually high poverty rate.
Former Richmond mayor Greg Halsey-Brandt told The Sun’s Douglas Todd that the problem is a result of wealthy property owners not fully reporting and paying taxes on their global income.
A federal official said Tuesday that the Canada Revenue Agency conducts “lifestyle audits” and “suspicious real estate practices” and is looking specifically at activity on the West Coast.
“The CRA is currently conducting audit projects on real property in British Columbia,” said Magali Deussing, who would not elaborate on the initiative.
On Monday a spokesman for B.C. MP Kerry-Lynne Findlay, Canada’s minister of national revenue, cited various actions to show that Canada takes a “zero tolerance” approach to tax evaders.
FAIR SHARE
While some experts note that many so-called “poor millionaires” or “astronauts” are actually living within the letter of Canadian tax law, Hyman said laws that allow Canadian residents to avoid paying their fair share must be changed.
“To permit foreign nationals to acquire permanent resident status for themselves and their dependents without becoming resident for income tax purposes for the duration of their PR status is an abomination,” he wrote. “It creates an attachment disorder for those who would obtain all of the benefits of Canadian residence and a pathway to precious citizenship for themselves and/or their dependents without their assuming any responsibility to contribute their fair share, based on their worldwide income as all resident Canadians are legally required to do.”
He rejected the government’s assurances that Canada has made significant headway in cracking down on tax cheats.
Foreigners are parking “their ill-gotten gains in B.C. real estate because other Pacific Rim countries like Australia, New Zealand, and the USA … enforce their anti-money laundering rules stringently while Canada does not,” he argued.
Hyman said the B.C. government, meanwhile, should be pressing Ottawa to ensure greater tax compliance because avoidance results in a reduction in B.C.’s share of the federal tax haul. The lack of tax revenue, in turn, has forced governments to look for new revenue sources, like the proposed sales tax hike to pay for transit expansion in Metro Vancouver.
“This adds to a growing sense of unfairness in the system among those who currently obey the tax laws,” Hyman said.
Carter Mann, a spokesman for Findlay, boasted Tuesday of the Conservative government’s measures to protect the system’s integrity.
