An investigation by Canada Revenue Agency (CRA) into Metro Vancouver’s real estate market is expected to bring under scrutiny, people who are purchasing lavish lifestyles and expensive homes in Vancouver using unreported foreign income.

A Chinese daily newspaper reported that 50 auditors being assigned to investigate such purchases meaning up to 600 audits over the next year locally. [1]

Money Laundering

The CRA will investigate cases of individuals living beyond their means through money laundering practices – living rich and famous lifestyles – yet reporting minimal income in one of the most expensive cities in the world.

Census data from 2011 demonstrates there were 25,000 households in Vancouver, where their housing costs actually exceeded their declared income suggesting that this is unreported income that is fuelling home buying or at least home expenses here in Vancouver.

In a secret CRA presentation shared by the Chinese daily newspaper, the owner of a home purchased for $5.8-million was actually claiming the “Working Income Tax Benefit,” intended to provide government support to those living on low incomes.

Property Flippers to be Audited by CRA

The audits will also focus on GST/HST non-compliance and also property flipping. Property flippers who swiftly resell homes for profit will meanwhile be audited to see if their properties truly qualify for exemption from capital gains tax, granted to people selling their principal residence.

[1] Ian Young, “Leak reveals secret tax crackdown on foreign-money real estate deals in Vancouver,” South China Morning Post, accessed July16, 2016, http://www.scmp.com/news/world/united-states-canada/article/1989586/leak-reveals-secret-tax-crackdown-foreign-money-real.