10.5 Purpose-built Rental Program—when Transferee Is Liable

• 10.5 (1) Subject to section 10.6, a transferee who has obtained an exemption under section 10.2 or a refund under section 10.3 is liable under subsection (2) of this section if and from the time that the transferee

• (a) fails or refuses to comply with section 10.2(1)(c) or (3), or
• (b) fails or refuses to rent or offer for rent the apartments referred to in section 10.4(1) as required by paragraph (a) of that provision.

• (2) A transferee referred to in subsection (1) must pay to the administrator tax in an amount that is equivalent to the amount of the exemption or refund obtained.
• (3) Subject to subsection (8) and section 10.6, a transferee who has obtained an exemption under section 10.2 or a refund under section 10.3 is liable under subsection
• (4) of this section if, at any time before the tenth anniversary of the registration date of the eligible transaction in respect of which the exemption or refund was obtained, an interest in the qualifying property of any transferee who obtained the exemption or refund is subsequently transferred under a taxable transaction.
• (4) A transferee referred to in subsection (3) is liable from the time the application to register the subsequent transfer is made and must pay to the administrator tax in the amount calculated as follows:

where

• VI is the fair market value of the interest, in the qualifying property, transferred under the subsequent transfer, determined at the time of the subsequent transfer;
• VQP is the fair market value of the qualifying property that was the subject matter of the eligible transaction, determined at the time of the subsequent transfer;
• E is the amount of tax equivalent to the amount of the exemption or refund obtained;
• Y is the number of years between the registration date of the eligible transaction and the date of the application to register the subsequent transfer.

• (5) Subject to section 10.6, a transferee who has obtained an exemption under section 10.2 or a refund under section 10.3 is liable under subsection (7) of this section if, at any time before the tenth anniversary of the registration date, any of the following occur:

• (a) an apartment contained in the residential improvement ceases to be rented or offered for rent only on a monthly or longer-term basis;
• (b) an improvement that was, on the registration date, the residential improvement ceases to be classified, in whole or in part, under section 19 of the Assessment Act as property used for residential purposes;
• (c) an improvement that was, on the registration date, the residential improvement ceases to contain at least 4 apartments;
• (d) an improvement that was, on the registration date, the residential improvement is divided into strata lots;
• (e) if the eligible transaction in respect of which the exemption or refund was obtained was a transaction referred to in paragraph (a)(iii) or (e) of the definition of “taxable transaction” in section 1(1) of this Act, the applicable lease agreement is discharged.

• (6) A transferee referred to in subsection (5) is liable from the time an event described in paragraphs (a) to (e) of that subsection occurs.
• (7) Subject to subsection (9), a transferee referred to in subsection (5) must pay to the administrator tax in the amount calculated as follows:

where

• E is the amount of tax equivalent to the amount of the exemption or refund obtained;
• Y is the number of years between the registration date of the eligible transaction in respect of which the exemption or refund was obtained and the date on which the applicable event described in subsection (5)(a) to (e) occurs.

• (8) A transferee is not liable under subsection (4) if, at the time of the subsequent transfer, the transferee is liable under subsection (7) in respect of the same exemption or refund.
• (9) Any tax payable by a transferee under subsection (7) in respect of an exemption or refund is reduced by an amount of tax payable under subsection (4) by the transferee in respect of the same exemption or refund.
• (10) A transferee not referred to in subsection (1), (3) or (5) who has obtained an exemption under section 10.2 or a refund under section 10.3 for an amount greater than the amount to which the transferee is entitled under this Act must pay to the administrator as a tax liability the amount by which the exemption or refund received exceeded the exemption or refund to which the transferee was entitled.

2023-23-149.