Identification of non-resident purchasers in Quebec: will a new tax follow?
On February 13, 2019, the Government of Quebec published a draft regulation designed to identify in the land registry all non-resident purchasers of residential properties.
The proposed amendments to the Act respecting duties on transfers of immovables could lead the way for the imposition of a tax against non-residents, as other provinces have done.
For example, in British Columbia, the Speculation and Vacancy Tax (up to 2% of the value of the property) is payable annually by non-residents of the province who are owners of residential properties located in certain regions of the province, including Vancouver. In addition, the Additional Property Transfer Tax on Foreign Buyers (20% of the value of the property) is payable when a non-resident of Canada acquires a residential property in certain designated areas of the province, including Vancouver.
In Ontario, the Non-Resident Speculation Tax (15% of the acquisition price) is payable by non-residents of Canada when they purchase residential properties in the Greater Golden Horseshoe Region, which includes Toronto.
The new disclosure obligations require buyers to disclose the following information:
- For a natural person: the person’s citizenship and permanent residency status, if applicable, and their intent to occupy the property as their primary residence;
- For a legal person: the name of the place where the legal person was constituted, and whether the legal person is a resident in Canada within the meaning of the Income Tax Act; and
- For a trust or partnership: (i) the place where the contract was entered into; (ii) for a general partnership, whether at least half of the members are “foreign nationals”; (iii) for a limited partnership, whether a general partner is a foreign national; and, (iv) for a trust, whether the trust is resident in Canada.
The regulation is scheduled to come into force on October 1, 2020. Any person may submit its comments within the 45-day period to the Minister of Finance.