14 Exemptions | Land Title Practice Manual

In This Volume

14 (1) In this section:

“family farm” means farm land that

(a) is used, owned and farmed by one individual or by family members,
(b) is used, owned and farmed by a family farm corporation, or
(c)
for the purpose of an exemption claimed under subsection (3)(c.1) or (c.2), was, immediately before the deceased’s death, owned by the deceased and used and farmed by one or more of the following
- (i) the deceased;
- (ii) family members of the deceased;
- (iii)
  a family farm corporation that, at the time of the deceased’s death, was comprised of shareholders, each of whom was one of the following:
  - (A) a related individual of the deceased;
  - (B) a sibling of the deceased;
  - (C) a spouse of a sibling of the deceased, or
(d) for the purpose of an exemption claimed under subsection (3)(d.1) or (d.2) or subsection (4)(p.22)(ii)(B), was used, owned and farmed by the settlor or the deceased;

“family farm corporation” means a corporation of which

(a) the principal activity is farming farm land, and
(b) no shareholder is a corporation;

“family member” means an individual who is a Canadian citizen or a permanent resident of Canada and who is

(a) a related individual,
(b) a person’s sibling, cousin, child of the person’s sibling or sibling of the person’s parent,
(c) the spouse of a person described in paragraph (b),
(d) a sibling or cousin of a person’s spouse,
(e) a child of a sibling of a person’s spouse, or
(f) a sibling of a parent of the person’s spouse;

“farm land” means land classified under the Assessment Act as farm land;
“principal residence” means a parcel of land

(a) on which the person in relation to whose residency the exemption under this section is claimed usually resided and used as the person’s home,
(b) on which there are improvements that are designed to accommodate and that are used only to accommodate 3 or fewer families,
(c) on which all the improvements are classified under section 19 of the Assessment Act as property used for residential purposes, and
(d) that is not larger than 0.5 ha in area;

“recreational residence” means an interest in a parcel of land if the parcel is one

(a)
on which, before the transfer,
- (i) an individual transferor resided on a seasonal basis for recreational purposes, or
- (ii) if an exemption is claimed under subsection (3)(c) or (d) or subsection (4)(p.21)(iii)(B), the settlor or the deceased usually resided on a seasonal basis for recreational purposes,
(b) that has been classified as residential land under the Assessment Act,
(c) that is not larger than 5 ha in area, and
(d) that has a fair market value, determined under paragraph (a) of the definition of “fair market value”, of no more than $275 000;

“related individual” means a related individual who is a Canadian citizen or a permanent resident of Canada;
“sibling” means a sibling who is a Canadian citizen or a permanent resident of Canada;
“spouse” means a spouse who is a Canadian citizen or a permanent resident of Canada;
(1.1) For the purposes of the definition of “principal residence”, if the same dwelling is located on more than one parcel, the parcels are deemed to be one parcel.
(2) For the purposes of this section, a person is considered to have only one principal residence at a time.
(2.1) Despite subsections (3) and (4), a transferee is not exempt from the payment of tax under section 2.02(3) in respect of a taxable transaction that is a transfer described in subsection (3)(m) or (4)(q) or (u) of this section.
(3) If a taxable transaction entitles the transferee, on compliance with the Land Title Act, to registration in a land title office, that transferee is exempt from the payment of tax if the taxable transaction is a transfer within any of the following descriptions:

(a)
a transfer from a transferor who is not a trustee referred to in paragraph (c) or (d), to a transferee who is
- (i) a related individual, a sibling or a spouse of a sibling, if the land transferred is a family farm, or
- (ii) a related individual, if the land transferred is a recreational residence;
(b) a transfer from a transferor who is not a trustee referred to in paragraph (c), (d) or (e), to a transferee who is a related individual, if the land transferred has been the principal residence of either the transferor for a continuous period of at least 6 months immediately before the date of transfer or of the transferee for that period;
(c)
a transfer from a transferor who is a trustee of a deceased’s estate or of a trust established under a deceased’s will and who is registered in that capacity under the Land Title Act as the trustee of the land transferred to a transferee, if
- (i) the transferee is a beneficiary of the estate or trust,
- (ii) the transferee beneficiary was a related individual of the deceased at the time of the deceased’s death, and
- (iii)
  immediately before the deceased’s death, the land transferred
  - (A) was the deceased’s recreational residence or principal residence, or
  - (B) had been the transferee’s principal residence for a continuous period of at least 6 months;
(c.1)
a transfer from a transferor who is a trustee of a deceased’s estate or of a trust established under a deceased’s will and who is registered in that capacity under the Land Title Act as the trustee of the land transferred to a transferee, if
- (i) the transferee is a family farm corporation,
- (ii)
  at the time of the deceased’s death, the relationship between the deceased and each other person, if any, who is a shareholder of the family farm corporation was one of the following:
  - (A) the shareholder was a related individual of the deceased,
  - (B) the shareholder was a sibling of the deceased, or
  - (C) the shareholder is a spouse of a sibling of the deceased, and
- (iii) immediately before the deceased’s death, the land transferred was the deceased’s family farm;
(c.2)
a transfer from a transferor who is a trustee of a deceased’s estate or of a trust established under a deceased’s will and who is registered in that capacity under the Land Title Act as the trustee of the land transferred to a transferee, if
- (i) the transferee is a beneficiary of the estate or trust,
- (ii)
  at the time of the deceased’s death, the relationship between the deceased and the transferee beneficiary was one of the following:
  - (A) the transferee was a related individual of the deceased,
  - (B) the transferee was a sibling of the deceased, or
  - (C) the transferee was a spouse of a sibling of the deceased, and
- (iii) immediately before the deceased’s death, the land transferred was the deceased’s family farm;
(d)
a transfer from a transferor who is a trustee of a trust that is settled during the lifetime of the settlor and who is registered in that capacity under the Land Title Act as the trustee of the land transferred, if
- (i) the transferee is a beneficiary of the trust,
- (ii) the transferee beneficiary is a related individual of the settlor of the trust, and
- (iii) the land transferred is a recreational residence or was the principal residence of either the settlor for a continuous period of at least 6 months immediately before the date of transfer or of the transferee beneficiary for that period;
(d.1)
a transfer from a transferor who is a trustee of a trust that is settled during the lifetime of the settlor and who is registered in that capacity under the Land Title Act as the trustee of the land transferred, if
- (i) the transferee is a family farm corporation,
- (ii)
  at the time of the land transfer, the relationship between the settler of the trust and each other person, if any, who is a shareholder of the family farm corporation is one of the following:
  - (A) the shareholder is a related individual of the settlor,
  - (B) the shareholder is a sibling of the settlor, or
  - (C) the shareholder is a spouse of a sibling of the settlor, and
- (iii) the land transferred is the settlor’s family farm;
(d.2)
a transfer from a transferor who is a trustee of a trust that is settled during the lifetime of the settlor and who is registered in that capacity under the Land Title Act as the trustee of the land transferred, if
- (i) the transferee is a beneficiary of the trust,
- (ii)
  the relationship between the settlor of the trust and the transferee beneficiary is one of the following:
  - (A) the transferee is a related individual of the settlor,
  - (B) the transferee is a sibling of the settlor, or
  - (C) the transferee is a spouse of a sibling of the settlor, and
- (iii) the land transferred is a family farm;
(e)
a transfer from a transferor who is a trustee of a trust that is settled during the lifetime of the settlor and the transferor is registered in that capacity under the Land Title Act as the trustee of the land transferred, if
- (i) the transferee is a beneficiary of the trust,
- (ii) the transferee beneficiary is a related individual of the settlor of the trust,
- (iii) the land transferred was the principal residence of the settlor, and
- (iv) between August 18, 1990 and the date of the transfer, the transferor as trustee of the trust was continuously registered as the trustee of the then current principal residence of the settlor and, for the purposes of this paragraph, continuity is deemed not to have been broken if the transferor was not so registered for a period of one month or less but is deemed to have been broken if the transferor was not so registered for a period greater than one month,
(f)
a transfer from a transferor to a transferee, if
- (i) the transferee is a family farm corporation,
- (ii)
  each of the shareholders of the family farm corporation is
  - (A) the transferor,
  - (B) a related individual of the transferor,
  - (C) a sibling of the transferor, or
  - (D) a spouse of a sibling of the transferor, and
- (iii) the land transferred is a family farm;
(g)
a transfer from a transferor that is a family farm corporation to a transferee, if the land transferred is a family farm and
- (i) the transferee is the sole shareholder of the family farm corporation, or
- (ii)
  the relationship between the transferee and each other person who is a shareholder of the family farm corporation is one of the following;
  - (A) the transferee is a related individual of that shareholder,
  - (B) the transferee is a sibling of that shareholder,
  - (C) the transferee is a sibling of a spouse of that shareholder, or
  - (D) the transferee is the spouse of a sibling of that shareholder;
(h) a transfer from a transferor to a transferee who is a spouse or former spouse of the transferor and the transfer is made pursuant to a written separation agreement or a court order under the Family Law Act;
(i)
a transfer that changes a joint tenancy to a tenancy in common, if
- (i) the persons owning the interest in the land are the same before and after the transfer, and
- (ii) each person owning an interest in the land after the transfer has an interest in the land equal to that owned by the other owners;
(j)
a transfer if
- (i) a parcel, in this subsection called the “original parcel”, is subdivided into smaller parcels and the transferee of all of, or a registered ownership interest in, one or more of those smaller parcels was one of the registered owners of the original parcel immediately before its subdivision, and
- (ii) the transferee’s proportionate share of the fair market value of those smaller parcels, calculated using the fair market values as they were immediately after the subdivision, does not exceed the transferee’s proportionate share of the fair market value of the original parcel, calculated using the fair market value as it was immediately before the subdivision;
(k) a transfer by which land reverts, escheats or is forfeited to the Crown or by which land that has reverted, escheated or been forfeited to the Crown is returned;
(l)
a transfer made in accordance with a registered agreement for sale, if the transferee is
- (i) the purchaser under the agreement and the tax in respect of the agreement has been paid, or
- (ii) the assignee of the purchaser under the agreement and the tax in respect of the assignment has been paid;
(m) a transfer by operation of law to the survivor of a joint tenancy of the land consequent on the death of a joint tenant of the land;
(n) a transfer to the trustee in bankruptcy of land forming part of the estate of a bankrupt;
(o)
a transfer from the trustee in bankruptcy to the bankrupt of land forming part of the estate of the bankrupt, other than a transfer to the bankrupt of land described in paragraph (p), if
- (i) no consideration for the transfer is paid by or on behalf of the transferee, and
- (ii) a declaration to that effect is made by the transferee and the transferor in the return filed under section 2;
(p) a transfer from the trustee in bankruptcy to the bankrupt or the spouse or former spouse of the bankrupt of land forming part of the estate of the bankrupt, if the land transferred was the principal residence of the bankrupt immediately before the date of the bankruptcy;
(p.1) a transfer to a liquidator appointed under section 277 or 284 of the Strata Property Act of land referred to in section 277(3)(c)(i) or (ii) of that Act;
(p.2) a transfer under section 275 of the Strata Property Act of land that was shown on a strata plan cancelled under that section;
(p.3)
a transfer to facilitate an amendment to a strata plan under
- (i) the provisions of Division 1 of Part 15 of the Strata Property Act, or
- (ii) the provisions of Division 1 of Part 15 of the Strata Property Act in combination with either or both of section 80 or 253 of that Act,
if the transferee’s proportionate share of the fair market value of all the parcels that are involved in the amendment, calculated using the fair market values as they were immediately after the amendment, does not exceed the transferee’s proportionate share of the fair market value of all the parcels that are involved in the amendment, calculated using the fair market values as they were immediately before the amendment;
(q) a transfer to a person in the person’s capacity as personal representative, if the land transferred is part of the deceased’s estate;
(r) a transfer of a life estate, if the transferee of that life estate transferred the fee simple estate in the same land to the transferor of the life estate in a concurrent transaction;
(r.1)
a transfer of a life estate, if
- (i) immediately before the transfer of the life estate, a mortgage is registered as a charge on the same land in respect of which that life estate is transferred to the transferee of that life estate,
- (ii) the transferee of the life estate was the tenant for life under a registered life estate in the same land but the registration of that life estate was cancelled immediately before the registration of the charge referred to in subparagraph (i), and
- (iii) the transfer of the life estate and the transfer of the registered life estate referred to in subparagraph (ii) involve a transfer by the same transferor of a life estate in the same land, on the same conditions and to the same transferee;
(s) a transfer to a regional district, municipality, an improvement district, the Okanagan Basin Water Board, the Islands Trust, a board of school trustees as defined in the School Act, a francophone education authority as defined in the School Act, a water users’ community as defined in section 1(1) of the Water Users’ Communities Act, a regional hospital district, a library board as defined in the Library Act, a greater board as defined in the Community Charter, or any board incorporated by letters patent that provides services similar to those provided by a greater board;
(t) a transfer to the government in accordance with a bylaw under section 27 of the Community Charter or section 281 of the Local Government Act;
(t.1) a transfer to the government from a municipality for the purposes of exchanging land necessary for improving, widening, straightening, relocating or diverting a highway;
(u) [repealed];
(v) a transfer if the government is the transferor, and the transaction has been designated by the minister as exempt from payment of tax under this Act.

(4) If a taxable transaction entitles the transferee, on compliance with the Land Title Act, to registration in a land title office, that transferee is exempt from the payment of tax if the taxable transaction is a transfer within any of the following descriptions:

(a) a transfer to a board as defined by section 1 of the Health Authorities Act for the purposes of that Act;
(b) a transfer to a “registered charity” as defined by section 248(1) of the Income Tax Act (Canada), if the land being transferred will be used for a charitable purpose;
(c) a transfer to a “designated educational institution” as defined in paragraph (a) of the definition of “designated educational institution” in section 118.6(1) of the Income Tax Act (Canada) where the land being transferred will be used for an educational purpose;
(d) a transfer to a corporation established under the University Foundations Act or to the corporation established under the Trinity Western University Foundation Act;
(e) [repealed];
(f) [repealed];
(g) a transfer to the corporation established under the Library Foundation of British Columbia Act;
(h) a transfer to the corporation established under the Cultural Foundation of British Columbia Act;
(i) a transfer to an educational institution that receives grants under the Independent School Act, if the land being transferred will be used for an educational purpose;
(j) a transfer to the corporation or the committee established under the First Peoples’ Heritage, Language and Culture Act;
(k)
a transfer of 2 or more adjacent parcels, in this subsection called the “original parcels”, from their registered owners, in this subsection called the “original owners”, to a person who is registered under the transfer as a trustee under the Land Title Act, if
- (i) the transfer is to facilitate the subdivision of the original parcels, and
- (ii) after the registration under the Land Title Act of the plan of subdivision, the trustee transfers all of the parcels created under the subdivision to the original owners or to any one or more of them;
(k.1)
a transfer of all of, or a registered ownership interest in, one or more of the parcels created under a subdivision described in paragraph (k), if
- (i) the transfer is from the trustee referred to in paragraph (k) to any of the original owners, and
- (ii) that original owner’s proportionate share of the fair market value of the parcels created under the subdivision, calculated using the fair market values as they were immediately after the subdivision, does not exceed that original owner’s proportionate share of the fair market value of the original parcels, calculated using the fair market values as they were immediately before the subdivision;
(l) a transfer of the vendor’s interests under an agreement for sale, if the transferee is not the purchaser under the agreement for sale;
(m) a transfer to a mortgagee, if the mortgagee was the immediately preceding registered owner of the land;
(n) a transfer referred to in paragraph (b) of the definition of “taxable transaction”, if the transferee was the original vendor under the agreement for sale;
(o) a transfer of a lease agreement, except a lease modification agreement, with a term of 30 years or less remaining as at the date of registration of that lease agreement;
(p)
a transfer from a settlor to the Public Guardian and Trustee or a trustee that is a trust company or credit union authorized under the Financial Institutions Act to carry on trust business by a business authorization under that Act, if
- (i) the settlor is a natural person,
- (ii) the settlor was the registered owner of the fee simple interest in the land immediately before the transfer to the trustee,
- (iii) the administration of the trust estate is for the sole benefit of the settlor, and
- (iv) on the termination of the trust the land reverts to the settlor or to the executor or administrator of the settlor’s estate;
(p.1) a transfer from a trustee of a trust referred to in paragraph (p) to the settlor of the land being transferred;
(p.2)
a transfer to the Public Guardian and Trustee, if
- (i) the land transferred is to be held in trust by the Public Guardian and Trustee for the sole benefit of a minor,
- (ii)
  the minor is a related individual of
  - (A) the transferor, or
  - (B) the person whose estate is the transferor, and
- (iii)
  the land transferred was
  - (A) the principal residence of the transferor,
  - (B) the principal residence of the person whose estate is the transferor, or
  - (C) the principal residence of the minor;
(p.21)
a transfer to the Public Guardian and Trustee, if
- (i) the land transferred is to be held in trust by the Public Guardian and Trustee for the sole benefit of a minor,
- (ii)
  the minor is a related individual of
  - (A) the transferor, or
  - (B) the person whose estate is the transferor, and
- (iii)
  the land transferred was
  - (A) a recreational residence of the transferor, or
  - (B) the recreational residence of the person whose estate is the transferor;
(p.22)
a transfer to the Public Guardian and Trustee, if
- (i) the land transferred is to be held in trust by the Public Guardian and Trustee for the sole benefit of a minor,
- (ii)
  the minor is a related individual, or a sibling or a spouse of a sibling, of
  - (A) the transferor, or
  - (B) the person whose estate is the transferor, and
- (iii) the land transferred was a family farm;
(p.3)
a transfer from the Public Guardian and Trustee, if
- (i) the land transferred was held in trust by the Public Guardian and Trustee for the sole benefit of a minor, and
- (ii) the transferee is the beneficiary;
(q)
a transfer from a transferor to a transferee, each of whom is registered under the Land Title Act as a trustee of the land, if
- (i) the change in trustee is for reasons that do not relate, directly or indirectly, to a change in beneficiaries or in a class of beneficiaries or to a change in the terms of the trust, and
- (ii) the transferor and the transferee make a declaration to that effect in the return filed under section 2;
(r) a transfer from the Director, the Veterans’ Land Act (Canada), to a veteran or the spouse or surviving spouse of a veteran;
(s) a transfer to the Crown in right of Canada or to a corporation listed in Schedule 1 of the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act (Canada);
(t)
a transfer for the purpose of reconveying land
- (i) that was transferred in error, or
- (ii) in respect of which an error was made in the description or survey under which title to the land was registered;
(u)
a transfer referred to in paragraph (f) of the definition of “taxable transaction”, if
- (i) the amalgamation was effected under Division 3 of Part 9 of the Business Corporations Act, under sections 181 to 186 of the Canada Business Corporations Act (Canada) or under similar provisions of an enactment of Canada or of a province, and
- (ii) the continuing corporation files a certificate of amalgamation with the administrator, at the request of the administrator and within the time period specified by the administrator;
(v)
a transfer consisting of a lease, sublease or right to occupy premises, if it is coupled with a concurrent transfer of an estate in fee simple to the same land or a right to purchase with respect to the same land and
- (i) the lessee, sublessee or occupant, as the case may be, and the transferee of the fee simple estate are the same person, and
- (ii) tax was paid on the transfer of the fee simple estate or the right to purchase;
(w)
a transfer referred to in paragraph (f) of the definition of “taxable transaction”, if
- (i) the amalgamation was effected under Division 1 of Part 7 of the Societies Act, and
- (ii) the amalgamated society files a certificate of amalgamation with the administrator, at the request of the administrator and within the time period specified by the administrator.

(5) For the purposes of an exemption under subsection (3)(c) or (d) or subsection (4)(p. 21), no more than one recreational residence may be claimed in respect of the deceased’s estate or, as the case may be, the trust referred to in subsection (3)(d).

1987-15-5; 1987-50-16; 1987-64-3; 1989-9-4,5; 1989-28-23; 1989-47-391; 1989-49-3; 1989-51-21; 1989-82-17; 1990-7-15; 1990-15-4; 1990-16-23; 1990-65-1 to 3; 1991-16-7 to 10; 1992-21-5; 1993-40-16; 1993-47-18; 1993-53-16; 1995-3-10; 1997-4-24, 25, deemed effective March 26, 1997; 1997-52-65, effective August 1, 1997 (B.C. Reg. 287/97); 1998-5-24, deemed effective March 31, 1998; 1998-34-294, effective September 23, 1998 (B.C. Reg. 311/98); 1999-47-53, effective March 31, 1999; 1999-37-265, effective September 28, 1999 (B.C. Reg. 301/99); 2000-7-191, effective June 12, 2000; 1998-43-314, effective July 1, 2000 (B.C. Reg. 43/2000); 2000-24-32, effective November 1, 2000 (B.C. Reg. 280/2000); 2002-25-65, effective January 1, 2003 (B.C. Reg. 348/02), July 12, 2002 (B.C. Reg. 200/02); 2003-3-38, effective February 19, 2003; 2002-61-19, effective March 14, 2003 (B.C. Reg. 78/03); 1999-35-9, effective December 12, 2003 (B.C. Reg. 471/03); 2003-52-472, effective January 1, 2004 (B.C. Reg. 465/03); 2003-70-237, effective March 29, 2004 (B.C. Reg. 64/04); 2004-28-31, effective February 18, 2004; 2004-40-48, effective May 13, 2004; 2004-48-136 and 2005-2-16, effective December 31, 2004 (B.C. Reg. 597/2004); 2006-2-19, effective February 22, 2006; 2010-2-94, effective March 3, 2010; 2012-8-81, effective May 14, 2012; 2011-25-427, effective March 18, 2013 (B.C. Reg. 131/2012); 2013-17-31, effective July 25, 2013; 2014-1-13 (B.C. Regs. 43/2014 and 257/2015; 2014-15-192 (B.C. Reg. 35/2016); 2016-3-57; 2016-27-8; 2015-18-341 (B.C. Reg. 216/2015); 2018-4-61; 2023-10-911, 912.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

The Bulletins referenced under this heading are published by the Property Taxation Branch, Ministry of Finance. These bulletins may be accessed at www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/publications.

Subdivision Exemptions (Bulletin PTT 006)

See Bulletin PTT 006, Exemptions for Transfers in the Course of Subdivisions, February 2011, regarding the interpretation of the subdivision exemptions in s. 14(3)(j), (4)(k), and (4)(k.1) of the Act. In view of the possible complexities involved in the use of these exemptions, it may be advisable for parties contemplating a subdivision to consider requesting an advance ruling from the Income Taxation Branch, Ministry of Finance.

Conveyancing Errors (Bulletin PTT 011)

See Bulletin PTT 011, Transfers to Correct a Conveyance Error, July 2010, regarding the interpretation of the exemption for conveyancing errors in s. 14(4)(t) of the Act.

Amalgamation Exemption (Bulletin PTT 012)

See Bulletin PTT 012, Exemption for Transfers in Respect of an Amalgamation, February 2006, regarding the interpretation of the amalgamation exemption in s. 14(4)(u) of the Act.

Other Exemptions under the Act

See the following Bulletins regarding various other exemptions under the Act:

Property Transfer Tax Exemptions, Bulletin PTT 003, February 2016
Exemptions for the Transfer of a Principal Residence, Bulletin PTT 005, May 2015
Exemptions for the Transfer of a Recreational Residence, Bulletin PTT 007, May 2015
Exemptions for Transferring a Family Farm, Bulletin PTT 008, May 2015
Exemptions for Transfers to and from a Family Farm Corporation, Bulletin PTT 009, May 2015
Exemption for Transfers to and from Trust Companies or the Public Trustee, Bulletin PTT 010, January 2000
Exemption for Transfers of Land Subject to a Conservation Covenant, Bulletin PTT 013, January 2000
Exemptions to Minors for Transfers to and from the Public Guardian and Trustee, Bulletin PTT 026, September 2005

CASE LAW

Two respondents purchased undivided interests in five contiguous lots which they subsequently applied to consolidate and subdivide into two lots with each respondent as the sole registered owner of one of the subdivided lots. The word “parcel” is not defined in the Property Transfer Tax Act. There can be little argument that the meaning of “parcel” as assigned by the chambers judge accords with common usage; that is, a tract of land whose boundary is determined by common ownership. However, the real question is whether the scheme and object of the Property Transfer Tax Act indicate that the legislature used the word “parcel” in the more limited sense of the Land Title Act; that is, a lot, block, or other area that is subdivided and that bears a parcel identifier number under the land titles registration system. In other provincial statutes where the word “parcel” is defined or the word is not defined but the context relates directly to real property, the use of the word “parcel” means or implies the meaning given in the Land Title Act. The Property Transfer Tax Act itself makes numerous references to the Land Title Act that would indicate the legislature intended the two be read together. Further, the taxing event in the Property Transfer Tax Act depends on the transfer of a parcel, as “parcel” is defined in the Land Title Act. As a consequence, these two statutes must be considered in pari materia. In overturning the decision of the chambers judge, the Court of Appeal affirmed the minister’s decision to impose property transfer tax on the transfer of the subdivided lots to each of the respondents (Claridge Development (Hawthorne) Ltd. v. British Columbia, 1999 BCCA 702, supplementary reasons 2000 BCCA 104).

Note: A definition of “parcel” was added to s. 1(1) of the Act as part of the Taxation Statutes Amendment Act, 1999, S.B.C. 1999, c. 47, s. 50, deemed in force March 31, 1999, and retroactive to the extent necessary to give it effect on and after that date.

Family Farm Exemption: Section 14(3)(a)

For 55 years up to and including 2005, the parents of the petitioners owned, resided on and farmed a property which was also home to their children as they grew up. Between 1993 and 2005, the parents leased part of the farm to a third party for the purpose of grazing cattle. During that time, the parents maintained the fencing and irrigation, mowed the fields, put up the hay crop, checked the cattle and looked after the fruit, vegetable and flower gardens. In 2005, the parents transferred the property to their four sons, the petitioners, who rented the residence and the farming operation to generate income until the retirement of one of the sons who deposed he planned to live on the property and maintain it as a farm. The property transfer tax office denied the petitioners’ application for exemption from the payment of property transfer tax on the grounds that, because of the circumstances surrounding the lease of the property from 1993 to 2005, the transfer from the parents to the petitioners was not a transfer of a family farm and, hence, the exemption under s. 14(1) of the Act did not apply. The court found that, between 1993 and 2005, the parents continued to be responsible for infrastructure on the property and that their activities during that time constituted “farming” on both their own land and the land leased to the third party for grazing purposes. In the result, the court held that the transfer fell within the exemption in s. 14(1) of the Act and the transfer was exempt from property transfer tax (Weatherhill v. British Columbia, 2009 BCSC 361).

Principal Residence Exemption: Section 14(3)(b)

The petitioner and her husband purchased a house and established permanent residency in Vancouver, although they were not landed immigrants. The husband transferred his one-half interest in the house to the petitioner, who then claimed an exemption from property transfer tax as a related individual defined under s. 14(3)(b) of the Property Transfer Tax Act as a citizen or permanent resident of Canada. The Minister of Finance rejected the petitioner’s claim because she did not have legal status as a permanent resident under the provisions of the Immigration and Refugee Protection Act, S.C. 2001, c. 27. The court found that the Property Transfer Tax Act is tax legislation and the words “permanent resident” should be construed in their ordinary sense in that context and not in the immigration context. Accordingly, the court found that the petitioner was a permanent resident under the term’s ordinary meaning, and she was exempted from the property transfer tax imposed (Hutchinson v. British Columbia, 2003 BCSC 503).

The petitioner, a mother, created an inter vivos trust in which she was the sole trustee and beneficiary and her principal residence was the trust property. At a later date, the petitioner resigned as trustee and the property was transferred to her daughter as trustee. That transaction was exempt from tax under s. 14(4)(q). Shortly thereafter, the daughter signed a transfer to the mother personally and it was registered in the land title office. The petitioner appealed the decision of the province to impose transfer tax on the second transfer. At issue was the meaning of the words in s. 14(3)(b) “from a transferor who is not a trustee referred to in paragraph (c), (d) or (e)”. The court held that the s. 14(3)(b) “trustee” reference to subsections (c), (d), or (e) was only to the introductory language of each subsection, since that language was the only language that dealt with “trustees”—all of the further qualifying language in each of paragraphs (c), (d), or (e) only described the characteristics of the beneficiary of each trust and had nothing to do with the trustee characteristics. Accordingly, if the transferor was not a trustee described in the introductory language of each subsection, the exemption did not apply. The references to s. 14(3)(c) and s. 14(3)(e) were not relevant for unrelated reasons. The court found that the petitioner’s daughter was a trustee under s. 14(3)(d) because she was the transferor and trustee, the trust was inter vivos, and she was registered as the trustee of the trust property. The further language in the subsection that described the characteristics of the beneficiary of the trust could not be relied upon to disqualify the trustee, since that language had nothing to do with the trustee’s status. In these circumstances, the exemption in s. 14(3)(b) did not apply and the transfer was subject to tax (Dempsey v. British Columbia, 2014 BCSC 1977).

Subdivision Exemption: Section 14(3)(j)

The petitioners, owners of various parcels of land, entered into a joint venture agreement for the purpose of subdividing and developing the lands. The petitioners were registered as tenants in common of all of the lands, and the agreement provided that upon the completion of all subdivisions each of the petitioners would become the owner of specified lots with a total fair market value proportionate to that of each petitioner’s share as tenant in common of the unsubdivided lands. In determining whether the petitioners qualified for the exemption under s. 14(3)(j), the court held that the drafters of the exemption must have intended the exemption to apply if the proportionate fair market value of the subdivided land received by each transferee was not greater than the proportionate fair market value of the interest in the unsubdivided land held by that transferee. This interpretation was required because, on a strict reading of the subsection, the fair market value following subdivision would always be greater than the fair market value before subdivision and the exemption would never otherwise be available.

The court also held that in deciding whether the exemption was available, one was to look at the fair market value of the registered interests in the land before and after the subdivision. Accordingly, an unregistered trust agreement intended to maintain the petitioners’ respective interests through the course of two separate phases of the subdivision project could not be taken into account in determining the proportionate fair market values. In the result, the court held that the exemption was not available to the petitioners (Brock Holdings Ltd. v. R., [1993] B.C.J. No. 1803 (QL) (S.C.) (Chambers)).