Disclosure Requirements under the Property Transfer Tax Act – A Brief Overview

Over the past few years, various levels of government have introduced a variety of information collecting mechanisms in an effort to improve transparency surrounding property ownership and fight financial crime. This month we will discuss some relatively recent changes to the reporting required under the Property Transfer Tax Act (the “Act”).

When an interest in real property changes hands in British Columbia, filing a Property Transfer Tax Return is generally required. An individual who is added to title is known as a “transferee”. Since changes made in late 2018, the required disclosure now goes well beyond the name of the transferee. These new reporting requirements are intended to collect information about who the true beneficial owners of real property in British Columbia are.

Section 12.13 (3) of the Act requires disclosure of the following on all required returns if the transferee is an individual:

(a) … the date of birth of the transferee, and whether or not the transferee is a Canadian citizen or permanent resident of Canada,

(b) in the case of a transferee who is a Canadian citizen or permanent resident of Canada … the social insurance number of the transferee, and

(c) in the case of a transferee who is not a Canadian citizen or permanent resident of Canada, … whether or not the transferee is a citizen of a foreign country or state and, if so, … the date of birth and, as applicable, social insurance number or individual tax number of the transferee, and … the foreign country or state.

If the transferee is a corporation, Section 12.13 (4) of the Act requires disclosure of the following on all required returns:

(i) the total number of directors of the transferee,
(ii) the number of those directors who are Canadian citizens or permanent residents of Canada, and
(iii) the date of birth and social insurance number for each director who is a Canadian citizen or permanent resident of Canada,

(b) in relation to each director of the transferee who is not a Canadian citizen or permanent resident of Canada,

(i) the … contact information, date of birth and, as applicable, social insurance number or individual tax number of the director, and
(ii) … whether or not the director is a citizen of a foreign country or state and, if so, … the foreign country or state, and

(c) … the business corporation number of the transferee.

On September 17, 2018, the Information Collection Regulation (the “Regulation”) of the Act came into force. The Regulation now also requires disclosure of personal information regarding “corporate interest holders”. Section 2 of the Regulation specifies that:

(1) An individual is a corporate interest holder in respect of a relevant corporation if any of the following apply:

(a) the individual has legal or beneficial ownership or control, directly or indirectly, of

(i) shares of the relevant corporation representing 25% or more of the value of the equity of that corporation, or
(ii) 25% or more of the voting rights in respect of the relevant corporation;

(b) the individual has the right, directly or indirectly, to appoint or remove from office the majority of the board of directors of the relevant corporation;

(c) the individual has the right to exercise or does exercise, under a unanimous shareholders' agreement or otherwise, significant influence or control over the relevant corporation.

Section 2 of the Regulation goes on to specify that when determining whether a direct or indirect interest exists, (i.e. whether a given individual is a corporate interest holder),

“… a direct or indirect interest, power or right includes an interest, power or right that an individual has

(a) alone,
(b) together with one or more persons with common interests, or
(c) through

(i) a corporation,
(ii) a trustee of a relevant trust, or of any other trust,
(iii) a personal or legal representative,
(iv) an agent, or
(v) any other intermediary.”

This information looks beyond the name(s) being added on title and can provide insight into who controls corporations that hold interests in real property – and thus who truly controls and benefits from that property.

Section 8 of the Regulation specifies that:

… if a transferee is

(a) a relevant corporation, or
(b) a trustee of a relevant trust and that trust has one or more beneficiaries that are relevant corporations, the following information must be provided about each corporate interest holder:
(c) the name and contact information of the corporate interest holder,
(d) the date of birth of the corporate interest holder, and whether or not the corporate interest holder is a Canadian citizen or permanent resident of Canada,
(e) in the case of a corporate interest holder who is a Canadian citizen or permanent resident of Canada, the corporate interest holder's social insurance number, and
(f) in the case of a corporate interest holder who is not a Canadian citizen or permanent resident of Canada, whether or not the corporate interest holder is a citizen of a foreign country or state and, if so, as applicable, the social insurance number or individual tax number of the corporate interest holder, and the foreign country or state.

Similarly, where a trustee of a trust (other than a bare trust or expressly excluded trust) is added on title, Section 9 of the Regulation requires disclosure of the following information in relation to each beneficiary of the trust:

(a) in the case of a beneficiary who is an individual

(i) who is a Canadian citizen or permanent resident of Canada, the name, contact information, date of birth and social insurance number of the beneficiary, and
(ii) who is not a Canadian citizen or permanent resident of Canada, whether or not the beneficiary is a citizen of a foreign country or state and, if so, the name, contact information, date of birth and, as applicable, social insurance number or individual tax number of the beneficiary, and the foreign country or state;

(b) in the case of a beneficiary that is a corporation,

(i) the name, contact information, date of birth and social insurance number of each director of the beneficiary who is a Canadian citizen or permanent resident of Canada, and
(ii) in the case of a director who is not a Canadian citizen or permanent resident of Canada, whether or not the director is a citizen of a foreign country or state and, if so, the name, contact information, date of birth and, as applicable, social insurance number or individual tax number of the director, and the foreign country or state.

Section 9 of the Regulation works in conjunction with Section 12.13(5) of the Act to address bare trusts (expressly excluded from Section 9 of the Regulation). It sets out that the following information must be provided in relation to each settlor (an individual who put property into the trust) and each beneficiary of the trust if the individual being added to title is a bare trustee:

(a) in the case of a settlor or beneficiary who is an individual,

(i) in the case of a settlor or beneficiary who is a Canadian citizen or permanent resident of Canada … contact information, date of birth and social insurance number of the settlor or beneficiary, and
(ii) in the case of a settlor or beneficiary who is not a Canadian citizen or permanent resident of Canada … whether or not the settlor or beneficiary is a citizen of a foreign country or state and, if so … the date of birth and, as applicable, social insurance number or individual tax number of the settlor or beneficiary and … the foreign country or state;

(b) in the case of a settlor or beneficiary that is a corporation,

(i) the … contact information, date of birth and social insurance number of each director of the settlor or beneficiary who is a Canadian citizen or permanent resident of Canada, and
(ii) in the case of a director who is not a Canadian citizen or permanent resident of Canada, … whether or not the director is a citizen of a foreign country or state and, if so, … the date of birth and, as applicable, social insurance number or individual tax number of the director and … the foreign country or state.

Collectively, these requirements facilitate the creation of a record of who controls real property in BC that goes beyond whose name is on the title.

If one is contemplating adding a corporation or trustee to title to a piece of property in BC, it is important to attend carefully to these disclosure requirements early and to be proactive about gathering the required information. If you have questions about buying or selling property, or about adding individuals to title (e.g. as part of your estate plan) you can contact us.

Join us again next month when we will discuss another one of the recent legislative efforts to gather information about who really owns and controls property in BC, the soon-to-be-in-force Land Owner Transparency Act that received royal assent on May 16, 2019.

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