A B.C. man is not exempt from the speculation tax, despite being a Canadian citizen who lives and works in the province.
Darcy Garneau and his partner were working abroad in the United States but bought a home in Victoria in February 2018.
Despite living and working in B.C. for over a year, a lack of Canadian taxes filed in 2017 makes the couple look like a “satellite family” and therefore puts them in the small margin of the B.C. population who owe money for the speculation and vacancy tax.
The 2018 speculation and vacancy tax rate is 0.5 per cent of a home’s value. This tax can be offset by a tax credit if the person earns a high enough income.
“Our vacancy tax is nearly $5,000 on a property valued at close to $1 million,” Garneau said in an email. “The minimum income I need to earn as an owner occupant of my home in order to realize enough of a tax credit to offset the vacancy tax is $100,000.”
Luckily, Garneau was able to land a job with a high enough income, but he knows that many others wouldn’t.
“For argument’s sake, let’s say I did not find a job or earned substantially less the $100,000 needed to earn enough tax credits. In that case, I would be paying the vacancy tax even though I am an owner occupant during 2018,” Garneau said. “I can see where this could affect other Canadians who are returning to B.C. as a retiree. They simply would not meet the income requirements needed to avoid the vacancy tax on their owner-occupied home.”
Garneau believes that the nuances of this tax system unfairly targets some people.
“This act discriminates against new immigrants and returning Canadian citizens,” he said.
Garneau sought legal expertise and spoke with Scott Gorski, an associate and tax specialist with Borden Ladner Gervais LLP in Vancouver. Gorski agreed that the tax held unfair expectations for new Canadians.
“The problem for new Canadians is that the speculation tax is not just targeting vacant homes. It is also targeting persons with insufficient income for the government’s liking, even where the home is occupied throughout the year,” Gorski said.
“I have personally only seen a couple of cases involving new Canadians struggling with the speculation tax. However, I have seen many people struggling in a variety of ways outside the context of new Canadian residents as well … In my view, this new tax and the declaration system was not as simple or straightforward as the government thinks; a lot of people struggled with it.”
B.C. Minister of Finance Carole James would not speak directly to Garneau’s case, but issued the following statement on the speculation and vacancy tax.
“We are helping make sure people who live and work in B.C. have a place to call home. We’re helping turn vacant properties into homes for people and ensuring foreign owners and satellite families are paying their fair share,” James said. “Our plan is working. Since May, home prices are moderating in all segments of the market. And all revenue raised through the tax will support affordable housing in the local community.”
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