B.C. urged to tighten scrutiny of foreign investors after spike in cash seized at YVR

Currency seized from Chinese citizens arriving in Vancouver more than doubled to $6.4 million in 2015

The B.C. government is under renewed pressure to regulate foreign money inflows after the disclosure that the amount of undeclared cash seized from Chinese citizens at Vancouver airport has soared over the past three years.

Data obtained by NDP MLA David Eby under a federal access to information request shows undeclared cash confiscated from Chinese arrivals at YVR more than doubled from $2.8 million in 2013 to $6.4 million in 2015.

That’s in addition to more than $320 million over the same three years that was declared by Chinese citizens.

“It seems significant to us from the perspective of where is the money going,” Eby said. “Is it going into the real estate market or is it going somewhere else?”

The vast majority of money seized at YVR in each of the three years was carried by Chinese nationals – more than from all other countries combined.

Eby said the province could do much more to deter foreign investors from parking money in the B.C. real estate market and largely avoiding taxes.

The B.C. government introduced its 15 per cent tax on foreign buyers of property in Metro Vancouver effective Aug. 1 and the pace of sales has dropped sharply since then.

Eby said the foreign buyers tax may be encouraging local buyers to wait on the sidelines to see if prices will fall.

But he said he doubts it will have much impact on wealthy overseas investors.

“For true international speculators that are bringing money into real estate as a way to get it out of an unstable economy somewhere else, this is just a cost of doing business.”

Because the new tax applied on deals struck before Aug. 1 that had not closed by that date, it triggered a scramble by some foreign buyers to speed up closing or find other ways around the tax.

The developer of the Trump tower in downtown Vancouver has acknowledged helping foreign buyers of the pre-sale condos there assign their contracts to Canadian family or friends to avoid paying the tax.

Eby argues for a higher ongoing annual property tax surcharge on homes owned by people who are not residents of Canada for tax purposes and not paying tax in B.C.

He said the government’s belated tax on foreign buyers going forward fails to extract anything from all those who already own homes here.

“There’s a lot of money already here in the real estate market,” he said. “There’s a lot of investors who were already here before the new tax came in. And those people don’t have to pay the new tax.

Eby also said the province needs to take steps to modernize the tax system and better enforce against illegal transfers.

“There’s lots of smoke but there don’t appear to be any firefighters.”

A finance ministry spokesman said illicit transfers of cash into Canada is the jurisdiction of the federal government, as is anything that happens at Vancouver airport.

In a statement issued Sunday in response to newly reported allegations of possible tax evasion, Finance Minister Mike de Jong said the Canada Revenue Agency is the primary body for auditing income tax compliance.

“The CRA must diligently enforce the law,” he said.

But immigration lawyer Richard Kurland said the CRA would be much better armed to crack down on foreign tax evaders if the B.C. government had made property buyers declare whether they are tax residents of Canada.

That would make it much easier for the CRA to extract capital gains tax from foreign citizens when they sell property at a profit, he said.

“Not having that information ties CRA’s hands and that’s not right. B.C. has to help CRA do its job. It can’t just smile, cross its hands and say ‘Good luck with this, there’s nothing we can do.’ Because it’s just not true.”

Kurland suggested Canadian authorities could reel in the largest tax gain in history by cracking down on unreported property gains – not just from investors in China, but the U.S. and Europe as well.

“This is a huge amount of money that’s just uncollected.”

Surrey North Delta Leader

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