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Here is the new form and the new rule relating to the sale of real estate.
Taxpayers must NOW REPORT the sale of their home on their tax return.
If you’re claiming an exemption from the capital gains tax, in the past that exemption was automatic.

The CRA will have authority at assess capital gains tax
on real estate that is not reported on the tax return for the year in which it is sold.
Ottawa will work with provincial governments (which maintain land registry operations)
to ensure that all residential real estate transactions are recorded and taxed as required.

Tax returns, starting this April, will require details on the date a property was acquired,
the proceeds of disposition and a description of the property.

To qualify for a capital gains tax exemption,
you must complete and file a separate Schedule. (attached)

The full exemption may not be granted, depending on the details provided.

**If you sell your home but forget to include this information on your return,
the CRA will not allow the proceeds to be tax-free. In that case you must ask the CRA to amend the return. This amendment will be granted “in certain circumstances” but may also come with a penalty equal to the lesser of $8,000 or $100 per month from the sale date to the request date.

**If you have a suite in your home, then sell it, the selling price must be split and reported.
Part of it will qualify to the tax exemption and part will not.

In markets with elephantine gains in home prices, this could be quite the bombshell.

JARED LINDZON
The Vancouver Sun

A vast majority of Canadians pay their fair share of taxes, but those who don’t put an increased burden on the rest of us. That is why the Canada Revenue Agency (CRA) has implemented initiatives to help Canadians participate in the efforts to help fight offshore tax avoidance and evasion.

The Offshore Tax Informant Program (OTIP) rewards those who come forward with information regarding major offshore tax avoidance that leads to the collection of taxes owing. OTIP has two objectives: encourage those with information to come forward to ensure the fairness of the tax system for all Canadians, and discourage those who are contemplating breaking the law, as there is a high probability that they will get caught.

To target the most serious cases, the CRA only offers an informant a contract leading to an award if the potential assessment of federal taxes, excluding interest and penalties, exceeds $100,000.

Once the taxes owed are collected by the CRA, a reward of between five and 15 per cent of the federal taxes collected (not including interest and penalties) will be awarded to the individual, providing he/she meets all the necessary requirements of the program.

Any individual, no matter where in the world, is eligible to participate as an informant, subject to certain limitations.

“The Offshore Tax Informant Program is an important tool the CRA has at its disposal to combat tax avoidance and evasion,” explained Lisa Anawati, deputy assistant commissioner of the CRA. “Through this program Canadians can play a role in combating tax avoidance and evasion, an issue that impacts us all.”

The initiative is part of a global effort to reduce international tax avoidance and evasion. It also mirrors other programs that are currently being pursued by the Organisation for Economic Cooperation and Development (OECD) and G-20 countries, such as the Whistleblower Office that was established by the Internal Revenue Service (IRS) in the United States.

“Fighting international tax evasion and aggressive tax avoidance is a global issue that goes beyond Canada’s borders and requires international solutions,” Anawati said. “That is why we are working within legal frameworks with our international partners and sharing best practices as well as information, to unravel complex tax structures.”

Information provided through the program will remain confidential, as will the identity of the individual providing the information, unless they are required to testify as part of an investigation.

Those who have been convicted of tax- evasionrelated offences in the past are barred from participating in the program. All calls made to the toll-free tip line are kept confidential, and all information provided over the phone is collected on a no-names basis to protect informants’ identities.

“This program is proving to be very useful,” Anawati said. “As of Dec. 31, 2016, OTIP has received 407 written submissions, 126 of which are active submissions still being reviewed — and, furthermore, has entered into over 25 contracts with individuals who have provided information.”

Those with information are encouraged to call the dedicated North American toll- free number ( 1- 855345-9042) or local number (613-960-4265) that can be reached from anywhere in the world.

Canadians who want to voluntarily correct their tax filings are also able to do so through the CRA’s Voluntary Disclosure Program ( VDP). Through this program, individuals, employers, corporations and other taxpaying entities are able to correct unreported income, capital gains, misappropriated funds, unreported GST/HST, over-claimed input tax credits and unfiled information returns without being penalized or prosecuted.

Canadians who want to take advantage of the VDP program must complete form RC199 or send a letter providing the same information as the form to the CRA by mail, fax or online.

“International tax evasion and aggressive tax avoidance carry a cost for all Canadians and can have serious consequences for those who choose to participate in these activities,” Anawati said. “We strongly encourage those who wish to correct their tax affairs to do so to gain peace of mind.”

While international tax evasion and aggressive tax avoidance remain a significant problem around the world, proactive steps like the establishment of the VDP and OTIP help ensure everyone pays their fair share of taxes.

For more information on the OTIP, visit http://www. cra-arc.gc.ca/gncy/cmplnc / otip-pdife/menu-eng.html

For more information on the VDP, visit http://www. cra-arc.gc.ca/voluntary disclosures/

© 2017 Postmedia Network Inc

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Property owners in BC will start to receive 2017 property assessment notices in early January 2017. These notices are prepared by BC Assessment, a provincial Crown corporation that classifies and values all real property in British Columbia. Visit the BC Assessment website to learn more about assessment notices (link is external) and property values (link is external).

The Land Title and Survey Authority of British Columbia (LTSA) is responsible for administering the land title and survey systems of BC that provide the foundation for all real property business and ownership in the province. The LTSA delivers secure land titles through timely, efficient registration of land title interests and survey records. Your title is a source of some of the information shown on your property assessment notice.

Contact BC Assessment (link is external) if:

• You did not receive an assessment notice (link is external). The 2017 property assessment notices are prepared using information current as of November 30, 2016. If your property transaction occurred after this date, the information may not have been included in the assessment roll used to generate the notices.
• You need to discuss your assessment with a representative.

If your address information needs to be updated, you must notify both organizations:

• BC Assessment: update your address in the assessment roll (link is external).
• LTSA: update your address on title using Form 15, and submit it to a land title office.

The LTSA also handles any name changes required to the assessment notice. Complete Form 17 –  Change Name and submit it to a land title office in person or by mail. Learn more about what else is needed to change a name on title.

The general public should contact lawyers or notaries to conduct filings, such as removing the name of a deceased person from title.

Customers can sign up for a myLTSA Explorer account to conduct searches for titles or plans, or use the services of a Registry Agent to obtain copies of documents. See Hire a Professional to Assist You for contact details.

The LTSA does not provide legal advice and cannot assist customers with completing application forms for land title registration or conduct title searches over the telephone.

Copyright © 2016 Land Title and Survey Authority of British Columbia.

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WHEN DISASTER STRIKES

Jennifer Clee
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What happens when a property is damaged by fire before completion? Must the buyer complete or can the buyer walk? What if the buyer wants to complete with a price adjustment? A buyer’s options will depend upon a myriad of factors including the law, facts, contract terms and the parties’ conduct.

In Gill v. Zhang,¹ three days before completion, the buyers learned that the property they had contracted to buy had been damaged by fire and could not be repaired before completion. Despite the damage, the buyers still wanted to complete, but with a price adjustment.

The parties’ version of the events following discovery of the fire conflicted. The buyers maintained they remained willing to continue with the contract, subject to receiving information from the sellers about the fire and their insurance and negotiating a price adjustment. The sellers did not produce the requested information and refused to discuss any accommodations that would allow the contract to complete, maintaining that the buyers’ lawyer had told the sellers the sale would complete with no price change. The sellers advised the buyers to complete or alternatively, consider the contract terminated. The sale did not complete and the buyers sued the sellers for specific performance with abatement of the price.

The Court considered the following issues:

The Court found that the sellers breached the contract by their inability to deliver the property in accordance with clause 8 and by their failure to act reasonably to address the consequences of the fire.

With respect to the second issue, the Court cited the buyers’ options given the sellers’ breach: either to affirm the contract (in which case the contract remained in force with all its original terms) or to accept the sellers’ repudiation (in which case both parties were relieved of their contractual obligations). The Court acknowledged, as a general principle, the buyers’ right to a reasonable opportunity to assess their position and the damage before electing to affirm or to accept the sellers’ breach.

It was evident, from the correspondence between the buyers’ lawyer and sellers’ notary, that the buyers had not accepted the sellers’ repudiation, but rather wished to continue with and to affirm the contract subject to receiving more information and to negotiating a price adjustment.

The issue then was whether the buyers had affirmed the contract, rendering the buyers in breach of clause 12 when they did not complete. This issue turned on credibility, given the conflict in the parties’ evidence. The Court did not accept the sellers’ evidence, finding the buyers had not affirmed the contract, but rather had indicated their intention to affirm with a price adjustment. Consequently, the Court found the buyers had not breached their obligations under the contract and the sellers could not require payment of the balance of the purchase price in circumstances where they were unable to convey what they were required to under the contract.  

The Court granted the buyers’ application for an order for specific performance with an abatement of the purchase price after the Court accepted the property was sufficiently unique to the buyers.

As Gill illustrates, when a property has suffered damage before completion, a party’s conduct can significantly impact their legal rights. Accordingly, if a licensee learns, prior to completion, that a property has been damaged by fire, flood or by some other event, the licensee should immediately advise their client to seek legal advice.

Copyright © British Columbia Real Estate Association

Bcrea
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Since the last Legally Speaking on this topic,¹ the Supreme Court of British Columbia has awarded significant damages against two owner-builders for poor construction. The provincial government has also raised the threshold for the owner-builder exemption.

Since July 1, 1999, unless an exemption applies, every new home in British Columbia must be built by a licensed residential builder, registered with the Homeowner Protection Office (HPO) and enrolled for home warranty insurance. The owner-builder exemption permits an individual to build his or her own home, or to act as their own general contractor, if they meet certain requirements. An owner-builder may provide home warranty insurance, if they wish. Many do not.

If an owner-builder does not supply home warranty insurance, the Homeowner Protection Act imposes a statutory warranty.² The owner-builder is deemed to promise to subsequent owners that the home is, in effect, properly built. From the date of the occupancy permit,³ this ten-year statutory warranty covers materials and labour for two years, building envelope for five years, and structure for ten years. This warranty cannot be waived by agreement.

In Chapman v. Stacey, the buyers relied on their statutory warranty to sue the owner-builders who built the buyers’ home.⁴ This appears to be the first case of its kind. Contrary to the building code and the architect’s plans, the owner-builders improperly built a deck, causing significant drainage problems. The court awarded judgment against the owner builders for $96,900 and GST, being the cost to remediate the deck, plus interest.

Recently, the government added a significant new owner-builder requirement. Effective July 4, 2016, every owner-builder applicant must pass an examination on home construction fundamentals.⁵ An applicant gets one chance to pass the exam per application; 70 per cent is necessary to pass.

When listing a home within approximately ten years of the date of the occupancy permit, the date of first occupancy, or readiness for occupancy, whichever came first:

• A REALTOR® must inquire whether an owner-builder built the home. If the building permit was issued before November 19, 2007, contact the HPO directly. If issued on or after that date, check the HPO’s online New Homes Registry.
• If an owner-builder built the home:
• • Before November 19, 2007, AND there is no home warranty insurance, the HPO will have issued an Owner Builder Declaration and Disclosure Notice to the owner builder. So long as the ten-year statutory warranty is running, that notice MUST be given to the buyer before entering any agreement to buy the home;
  • On or after November 19, 2007, if it is permissible to sell the home, the HPO will have issued a Disclosure Notice to the owner builder. That notice will say whether there is home warranty insurance or not. So long as the insurance applies or the statutory warranty runs, the buyer MUST be given the Disclosure Notice before entering any agreement.

If the home fails to meet the HPO’s requirements, a REALTOR® must not list it.

If a REALTOR® commits professional misconduct or conduct unbecoming a licensee, the Real Estate Council of BC may now order the licensee to pay a very large penalty,⁶ plus an additional penalty equal to the licensee’s remuneration in the deal.⁷ The HPO’s Registrar may impose a penalty up to $25,000, and the province may prosecute the licensee. There could also be a lawsuit.

If there is any doubt whether a home meets the HPO’s requirements, do not assume anything. Check with the HPO.

Copyright ©2016 BCREA

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BCREA
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Consumer awareness took a step forward with the announcement of new requirements for real estate contracts. Following on a promise made by Premier Clark in March, as of May 16, 2016 the government will require contracts prepared by real estate licensees to include clauses stating that the contract cannot be assigned without the written consent of the seller, and that any profit from an assignment goes to the initial seller. Clients can instruct licensees to omit or change the clauses. “Real estate consumers now have a tool to help them decide whether they want their contracts to be assignable,” says BC Real Estate Association (BCREA) President Deanna Horn. “Like many other provisions in the contract, buyers and sellers have the option of keeping the new paragraph, changing it or striking it out completely—but at least the conversation is more likely to happen now.” BCREA supports the new requirements. To help consumers and REALTORS® with the transition, the Association is adding the following paragraph to the residential and commercial Contracts of Purchase and Sale: The Seller and the Buyer agree that this Contract: (a) must not be assigned without the written consent of the Seller; and (b) the Seller is entitled to any profit resulting from an assignment of the Contract by the Buyer or any subsequent assignee. “Assignment” is the practice of someone assigning their rights in a contract to someone else before the transaction completes. In simple terms, someone can buy the right to step into the original buyer’s shoes to complete the contract. Assigning one’s right to a contract is a legitimate practice, allowed by common law and also by section 36 of the Law and Equity Act. Also today, Minister of Finance Mike de Jong announced that, starting in June 2016, the provincial government will begin collecting citizenship data of real estate owners through the Property Transfer Tax form. “BCREA is pleased that the government will collect this information, in which there is obviously a lot of public interest,” says Association CEO Robert Laing. “Strong policy is based on solid information, and we look forward to learning more about this aspect of the real estate market.”

Copyright ©2016 BCREA

BCREA
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Consumer awareness took a step forward with the announcement of new requirements for real estate contracts.

Following on a promise made by Premier Clark in March, as of May 16, 2016 the government will require contracts prepared by real estate licensees to include clauses stating that the contract cannot be assigned without the written consent of the seller, and that any profit from an assignment goes to the initial seller. Clients can instruct licensees to omit or change the clauses.

“Real estate consumers now have a tool to help them decide whether they want their contracts to be assignable,” says BC Real Estate Association (BCREA) President Deanna Horn. “Like many other provisions in the contract, buyers and sellers have the option of keeping the new paragraph, changing it or striking it out completely—but at least the conversation is more likely to happen now.”

BCREA supports the new requirements. To help consumers and REALTORS® with the transition, the Association is adding the following paragraph to the residential and commercial Contracts of Purchase and Sale:

The Seller and the Buyer agree that this Contract: (a) must not be assigned without the written consent of the Seller; and (b) the Seller is entitled to any profit resulting from an assignment of the Contract by the Buyer or any subsequent assignee.

“Assignment” is the practice of someone assigning their rights in a contract to someone else before the transaction completes. In simple terms, someone can buy the right to step into the original buyer’s shoes to complete the contract. Assigning one’s right to a contract is a legitimate practice, allowed by common law and also by section 36 of the Law and Equity Act.

Also today, Minister of Finance Mike de Jong announced that, starting in June 2016, the provincial government will begin collecting citizenship data of real estate owners through the Property Transfer Tax form.

“BCREA is pleased that the government will collect this information, in which there is obviously a lot of public interest,” says Association CEO Robert Laing. “Strong policy is based on solid information, and we look forward to learning more about this aspect of the real estate market.”

New Provincial Requirements for Contract Assignments Announced

The provincial government announced today that beginning May 16, 2016, new rules relating to the assignment of real estate contracts will come into effect. All licensees providing trading services need to be aware of these new rules and understand how to comply with the requirements.

The new provincial rules are intended to help real estate consumers make informed decisions about contract assignments before accepting an offer on their property. They will apply in transactions where a licensee is acting for a seller and/or a prospective buyer.

As part of the new requirements, licensees preparing an offer must include the following terms, unless otherwise instructed by their client:

• this contract must not be assigned without the written consent of the seller; and
• the seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.

The new rules also include steps that licensees must take if they are involved in a potential real estate transaction where an offer does not include these terms. More information on these steps is available on the Council’s website.

The Real Estate Council of BC is undertaking a number of initiatives to ensure consumers are well informed about the changes, and that real estate licensees act in compliance with the new requirements:

• We will be providing educational tools to prepare managing brokers and licensees to begin implementing the new requirements on May 16.
• We are developing a comprehensive enforcement and compliance plan to ensure that effective monitoring of the new regulations is in place.
• We are preparing a consumer education campaign to give prospective buyers and sellers the information they need about the new assignment regulations, because informed consumers are protected consumers.

Look for further announcements from the Council about educational materials for licensees and consumers beginning next week.         

More Information

Further information about the changes announced today is available at:

• http://www.recbc.ca/licensee/contract-assignment-faq.html

Further Consumer Protection Measures Expected

The new rules announced today are intended to strengthen the requirement under the Real Estate Services Act that licensees act only in the best interests of their clients. The BC government took action to regulate contract assignments in March 2016, following reports in the media that some real estate licensees were not acting in their clients’ best interests in relation to assignments. The Council has also taken action, by initiating an Independent Advisory Group to develop wide-ranging recommendations on measures to strengthen the enforcement of conduct requirements for real estate licensees and increase consumer protection. We look forward to receiving the final recommendations from that group in early June.

BC government announces new contract assignment regulations

On May 10, the provincial government announced new rules regulating contract assignments.

The new rules will require real estate contracts to include two terms: one requiring seller’s consent to assign the contract, and one requiring that any profit from an assignment goes to the initial seller.

Clients can instruct REALTORS® to omit or change these clauses.

These regulations will apply to all offers starting May 16, 2016.

The buyer’s Realtor will also be required to inform the seller if one, or both, of these clauses are removed from their offer. The seller’s Realtor must also disclose if the proposed contract is assignable or not – including any conditions that would be applicable to the assignment.

This is done through the new “Notice to Seller Regarding Assignment Terms” created by The Real Estate Council. This notice must be presented at the same time as the contract to either the seller’s Realtor, or directly to the seller.

These regulations apply to both residential and commercial transactions, with the exception of development units as defined by section 1 of the Real Estate Development Marketing Act.

BCREA will update WEBForms® with both the new Notice to Seller Regarding Assignment Terms form and revised Contracts of Purchase and Sale on May 16. Updates to PDP courses and an applicable webinar will be coming shortly.

Copyright ©2016 BCREA

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