B.C.'s finance minister is calling on the Canada Revenue Agency to "diligently" crack down on tax cheats, following a Globe and Mail investigation into how loopholes and lax oversight are making it easy for a network of local and foreign real estate speculators in Vancouver to play the system and dodge taxes.
"Like all taxpayers, I am concerned about allegations that some are not paying their share of taxes. For Canadians to have confidence in the tax system, the CRA must diligently enforce the law. I have and will continue to communicate this expectation to Finance Minister [Bill] Morneau and the federal government," Mike de Jong said in a statement Saturday.
The Globe investigation revealed how a local real estate speculator paid next to nothing in taxes last year, while buying and flipping multi-million dollar homes. Records obtained by The Globe show millions of dollars flowed through Kenny Gu's personal and corporate bank accounts in recent years, yet on last year's tax return he reported just $45,865 in personal income. The records suggest Mr. Gu is part of a network of speculators, who take advantage of Canada's principal residence exemption to pay no tax on sales of homes they didn't live in.
Mr. de Jong said that the province's new 15 per cent tax on foreign investors was intended to "address a number of the issues raised in today's story on real estate by the Globe and Mail."
He also indicated provincial regulators will be looking into Mr. Gu's business practices.
"British Columbia's real estate and financial regulators are also interested in the allegations raised in the story," the statement said. "Canada's finance ministers discussed concerns about tax auditing and potential money laundering in real estate at their June meeting in Vancouver. Provincial officials have also discussed B.C.'s ongoing concerns through the federal‐provincial‐municipal working group on housing affordability."