Disclosure of Beneficial Ownership of Real Estate in Ontario and British Columbia – Real Estate and Construction

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In recent years, the governments of Ontario and British Columbia have created rules relating to the disclosure of beneficial ownership of real estate. The Ontario government’s stated goal is to better understand the housing market, which may lead to additional enforcement actions, while the BC government’s rationale is to combat money laundering. money, ending hidden ownership of real estate and preserving housing affordability.

Ontario

On May 6, 2017, new requirements regarding the disclosure of certain prescribed information about most transfers of real property in Ontario came into effect. The disclosure is provided in a form prescribed in accordance with section 5.0.1 of the Land Transfer Tax Act, which is completed and filed online on behalf of the assignee(s). Once the form in section 5.0.1 is completed, a registration number is issued. Since all transfers of real estate in Ontario are electronic, the number must be inserted into the electronic transfer form for the transfer of ownership to be completed and recorded. Part of the information that must now be disclosed is the beneficial ownership of the transferred property. The online form is registered separately from the transfer of ownership; it is not part of the transfer and therefore not publicly available.

The Ontario government’s reason for implementing these new disclosure requirements is to “better understand housing market trends”. The government also indicated that “the additional data will be used for the administration and enforcement of the [land transfer tax] and to support evidence-based policy development regarding Ontario’s real estate market” (see Government of Ontario webpage at https://www.fin.gov.on.ca/en/ tax/ltt/prepressedinfo.html). that prior to the last election, the Ontario government was considering changes to certain land transfer tax policies and the way the tax is collected, and further that the government implemented the prescribed information form for determine additional revenue that may be generated as a result of To date, no such changes have been announced and completing the form itself does not incur any additional tax, although the form is used to confirm whether the non-resident speculation tax applies.

The prescribed information must be provided by any person who purchases or acquires land containing at least one and not more than six “single-family residences” or “farmlands” (both of which are defined in the Land Transfer Tax Act), except in the case of transfers to trustees of a mutual fund trust, real estate investment trust or SIFT trust (all defined in
income tax law ). Land acquisition includes transfers to trustees and transfers by executors to beneficiaries. The prescribed information indicates whether a beneficial interest in the land is acquired or retained (the disclosure rules do not distinguish between the two) by one or more persons who are not transferees. If so, the following information must also be provided for each beneficial owner who is not an assignee: name, date of birth, residence and nationality (for natural persons), and name, number of directors and information concerning nationality and other links with foreign countries (for companies).

British Columbia

the Information Collection Policywhich was promulgated under the To support­Transfer Tax Act, came into effect on September 17, 2018. The regulations require that an assignee who is a “relevant corporation” (generally, a private corporation) and a trustee of a “relevant trust” (generally, a private express trust) whose recipients include a relevant company to disclose information relating to the “company interest holder”. An individual is a “corporate interest holder” if he or she owns or has legal or beneficial control, directly or indirectly, of 25% or more of the shares of the corporation or 25% or more of the voting rights of the society. The information required includes the name and contact details of the social interest holder, as well as the person’s date of birth, citizenship and tax identification number.

In addition, the regulations require a transferee to disclose whether property is held on behalf of a partnership. In this regard, note that it is not possible to register a general partnership in British Columbia.

In addition to the above information, which is currently collected in the Land Transfer Tax Return that accompanies the BC Real Estate Transfer Form, the BC government has proposed to create a land registry that records beneficial ownership of real estate. The government first invited interested parties to provide comments on the Landowner Transparency Act (LOTA) white paper in June 2018. LOTA (Bill 23) passed first reading on April 2, 2019.

If the legislation is enacted, a transferee must file a transparency statement on the registration of an interest in land, indicating whether the interest is registered in the name of a corporation, trustee or partner of a partnership. If so, the interest holder’s identifying information, date of birth, tax identification number and prescribed information must be disclosed. LOTA also requires existing owners to file a return within a prescribed time frame (not yet available). If there is a subsequent change in the beneficial ownership of the land, the change must also be reported. There is no such requirement for the collection of information under the Real Estate Transfer Tax Act.

Individuals may ask the LOTA administrator to exclude some or all of their information from publicly available information if they believe disclosure would threaten their safety or mental or physical health or that of a family member. Beneficial owners have many legitimate reasons for using a corporation to hold registered title, including confidentiality and estate planning. It’s unclear how the administrator will adjudicate requests for omission of information. The regulations have not been published.

The administrator must make transparency records available for search and inspection by government, tax and law enforcement agencies, and financial industry regulators. In addition, the administrator must make certain information available when searched by members of the public, including the names of persons associated with a corporation, trustee or partnership.

LOTA is the first law of its kind in Canada. It does not impose new taxes, but it requires landowners to disclose the ultimate owner of a corporation, trust or partnership. The Government of British Columbia may impose the transfer of a beneficial interest in land based on the information collected. The information collected will also be useful to governments for the application of tax and non-tax legislation. not

Originally published in STEP Inside “MAY 2019” VOLUME 18 NO. 2 11

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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