British Columbia and Ontario have both recently instituted a Foreign Buyers Tax (B.C.) (the “FBT”) and a Non Resident Speculation Tax (Ontario) (the “NRST”), in an effort to address escalating home price and, arguably, the general supply imbalance. In British Columbia, the FBT is a 15.00% tax that foreign individuals, entities or taxable trustees pay in addition to the general property transfer tax* on transfers of residential property located in the Greater Vancouver Regional District (also known as the Metro Vancouver Regional District). In Ontario, the NRST is a 15.00% tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region (i.e. generally Metro Toronto and surrounds), by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.
In comparison, the Western Australian Government plans to introduce a 4.00% foreign buyers surcharge, consistent with similar measures in other Australian states (commencing January 1, 2019), which will apply to all purchases of residential property in Western Australia by overseas buyers, including individuals, corporations, and trusts. It will be payable in addition to the normal transfer duty on property purchases.
In a manner similar to BC and Ontario, the charge will be restricted to residential property, and will not apply to purchases of commercial or industrial property, residential developments of 10 or more properties, commercial residential property, or mixed-use properties that are used primarily for commercial purposes.
A point of interest for those watching the BC market, is that even though the BC rate of 15.00% is more than three times the rate proposed for Western Australia, the current BC NDP Government is investigating the introduction of both an annual 2.00% tax on the value of residential property that is vacant, and a doubling of the current 15.00% tax that foreign individuals, entities or taxable trustees, to 30.00%.
It should also be noted that the City of Vancouver currently has a empty home tax. Homes that are deemed empty will be subject to a tax of 1.00% of the property’s assessed value, commencing January of 2018.
It may be, that further development of the supply side will need the further attention of the municipal and provincial governments, if any real easing of the price of housing is to be sustained.
* BC Property Transfer Tax is 1.00% on the first $200,000, 2.00% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and 3.00% on the portion of the fair market value greater than $2,000,000.