2.02 Additional Tax Imposed

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Additional Property Tax Return

An additional property transfer tax is payable by “foreign nationals”, “foreign corporations”, or “taxable trustees” who acquire “residential property” in certain areas of the province. As of February 21, 2018, the additional property transfer tax is 20% of the fair market value of the property and applies to residential properties in the Metro Vancouver Regional District (other than the treaty lands of the Tsawwassen First Nation) and the Capital, Fraser Valley, Central Okanagan, and Nanaimo Regional Districts. Limited transitional exemptions are available for properties in the newly included regions (but not for properties in the Metro Vancouver Regional District).

If additional property transfer tax is payable, the Additional Property Transfer Tax Return (FIN 532) must be completed. Foreign nationals must complete the FIN 532 even if they are exempt under the Act. If a taxpayer is exempt, enter $0.001 for the additional property transfer tax in the electronic Property Transfer Tax Return and attach the completed FIN 532 and any supporting documents to the Property Transfer Tax Return. Ensure any required supporting documents for the additional property transfer tax are attached, such as documents proving citizenship, residency, or trust status.

The FIN 532 must be signed by the taxpayer and submitted to the Ministry of Finance the same day the property transfer is registered. Information is available on the Ministry’s website at www2.gov.bc.ca by searching “Additional property transfer tax” in the search bar.

CASE LAW

Property Transfer Tax Act “Transferee” Includes Amalgamated Company Making Land Title Act Section 191(4) Application

RC Limited Partner Inc. v. British Columbia, 2023 BCSC 1010 was an appeal under s. 21 of the Property Transfer Tax Act (the “PTTA”) of a decision first made by the Administrator appointed under the PTTA assessing the appellant, RC Limited Partner Inc. (“RC”), $1,629,200 in what is referred to in the decision as the “Additional Property Transfer Tax” (“Additional PTT”), but is often referred to as the “Foreign Buyers’ Tax”.

Under the PTTA, there are potentially two types of taxes imposed on transferees on taxable transactions: (1) under ss. 2 and 3, the general property transfer tax (“PTT”) of between one and three per cent; and (2) as of 2016, under s. 2.02, the Additional PTT of 20 per cent of the value of a residential property that applies to a taxable transaction of residential property in a “specified area” of B.C. when the transferee is a “foreign entity” or a “taxable trustee” as defined in s. 2.01.

A Co. and B Co., which were “foreign entities” under s. 2.01, jointly owned a residential property (“E St.”) in New Westminster. In 2018, A Co. and B Co. were amalgamated into the appellant RC, also a “foreign entity”. RC applied under s. 191(4) of the Land Title Act to change the name of the registered owner of E St. to its name. It applied for and was granted an exemption under s. 14(4)(u) of the PTTA for the general PTT, because the amalgamation was effected under the Business Corporations Act. However, as the transfer was a “taxable transaction” as defined by s. 1 of the PTTA, RC was assessed $1,629,200 for the Additional PTT, because by operation of s. 14(2.1), the s. 14(4)(u) exemption did not apply to the Additional PTT. RC disputed the assessment, arguing that it was not a “transferee” as defined and thus could not be assessed the tax. The administrator affirmed the assessment, which was upheld on appeal to the Deputy Minister of Finance. RC’s appeal to the court turned on the question of law of whether an amalgamated company that applies under s. 191(4) of the Land Title Act is a “transferee” against which Additional PTT can be assessed. RC argued that it was not a transferee because there had been no transfer of land to it under the amalgamation but only a change of name.

Held, appeal dismissed. The term “transferee”, when considered in the full context and purpose of the PTTA, includes an amalgamated company that applies under s. 191(4) of the Land Title Act. Though RC might not be considered a “transferee” under either the ordinary or technical meaning of the word, applying the modern approach to statutory interpretation led to the conclusion that for the purposes of the PTTA it was considered such. The definition of “taxable transaction” in s. 1(1)(f) of the PTTA expressly includes “an application under section 191 of the Land Title Act in respect of an amalgamation referred to in section 191(4) of that Act”. Section 14(4)(u) of the PTTA carves out an exemption from general PTT for applications where the corporate amalgamation is effected under the Business Corporations Act or the Canada Business Corporations Act, R.S.C. 1985, c. C-44, but there is no such exception for the Additional PTT that applies to “foreign entities” including B.C. companies that are controlled by “foreign nationals”, as RC was. Subsection 14(2.1) expressly preserves the application of the additional PTT to transactions under s. 191(4) of the Land Title Act. The scheme and object of the PTTA, and the intention of the legislature, weighed more heavily in the interpretation of the PTTA than did the ordinary meaning of “transfer”. Construing “transferee” to exclude an amalgamated company applying under s. 191(4) would lead to an absurd result: that an application under s. 191(4) was a taxable transaction that could never be taxed. Considering the PTTA as a whole, and in light of the specific provisions relating to the imposition of the Additional PTT on certain transactions and transferees, the legislature intended the definition of “transferee” to include an amalgamated company making an application under s. 191(4) of the Land Title Act.