New rules came into force June 10th 2016 requiring additional disclosure from purchasers regarding citizenship and “bare trust” status when registering property transfers in B.C.
The new rules, part of a series of property transfer tax changes introduced in the latest provincial budget, require citizenship and residency information to be collected on individuals and directors of corporations that purchase property in B.C. The rules also create new disclosure obligations where individual or corporate purchasers are acting under a bare trust as bare trustees. These additional disclosure requirements have been added as new mandatory fields in the Ministry of Finance’s updated Property Transfer Tax Return (“the Return”).
Individual purchasers are now required to disclose on the Return whether they are Canadian citizens or permanent residents and, if they are not, they must disclose their country of citizenship.
Corporations are now required to disclose their total number of directors, which of those directors are Canadian citizens or permanent residents and the name, address and country of citizenship of those directors that are not Canadian citizens or permanent residents.
The Return also requires transferees to disclose where they are purchasing as trustee under a “bare trust”. In a bare trust, the registered and legal owner of a property agrees to act as nominee and agent and to hold the beneficial interest in the property in trust for the beneficiary, who does not appear on title. Under the new rules, purchasers must disclose if they are bare trustees and, if so, provide citizenship and residency information about the settlor and beneficiaries of the bare trust equivalent to the information provided by individual and corporate purchasers.
Uncertainty regarding bare trust disclosure requirements
It is currently unclear whether the new bare trust disclosure requirements apply to all bare trusts, or only bare trusts where the underlying trust instrument is registered in the Land Title Office. Anecdotal evidence suggests that many bare trusts – perhaps the vast majority – are created without registration of the underlying instrument. These disclosure issues will be important to monitor in the coming months as commentary from industry participants and the government emerges.
To read more about the other recent changes to property transfer tax regime in B.C., click here.
EKB’s Commercial Real Estate team is experienced and knowledgeable in this area and can assist you further.