1994 Legislative Session: 3rd Session, 35th Parliament
FIRST READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


HONOURABLE ELIZABETH CULL
MINISTER OF FINANCE AND
CORPORATE RELATIONS

BILL 17 -- 1994

PROPERTY TRANSFER TAX
AMENDMENT ACT, 1994

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

1 Section 1 (1) of the Property Transfer Tax Act, S.B.C. 1987, c. 15, is amended

(a) in the definition of "tax" by striking out "interest that is or" and substituting "interest and penalties imposed or that",

(b) in the definition of "taxable transaction" by adding after "section 187 (4) of that Act" the following:

and includes

(f) 2 or more lease agreements or options to lease where those transactions are in respect of the same land and where

(i) the applications for registration of the transactions are made at a land title office within 6 months of each other,

(ii) each of the transactions provides either a term during which a person is given a right to occupy the land or, in the case of an option to lease, a right to enter into a lease agreement under which a person will be given a right to occupy the land for a term specified in the option to lease, and

(iii) the terms referred to in subparagraph (ii), other than terms provided by a time share ownership plan within the meaning of the Real Estate Act, a time share use plan within the meaning of the Real Estate Act, a sublease or an assignment, exceed, in aggregate, 30 years; , and

(c) by repealing the definition of "transferee" and substituting the following:

"transferee" means a person to whom land is transferred under a taxable transaction, and, for the purposes of section 3 (5), includes a person to whom an option to lease referred to in paragraph (f) (ii) of the definition of "taxable transaction" gives a right to enter into a lease agreement under which is given a right to occupy land for a term that is not the same as or included within a term provided by any other of the transactions that comprise the taxable transaction referred to in that section; .

2 Section 3 is amended by adding the following subsections:

(4) The tax owing on a taxable transaction referred to in paragraph (f) of the definition of "taxable transaction" shall be calculated as if

(a) that taxable transaction were a single lease transaction referred to in paragraph (d) of the definition of "taxable transaction", and

(b) the term of that lease transaction were the aggregate of the terms referred to in paragraph (f) (ii) of that definition.

(5) Each transferee under the taxable transaction referred to in subsection (4) shall be jointly and severally liable to pay the tax owing on that taxable transaction.

3 Section 3.1 (1) is amended in paragraph (b) of the definition of "eligible transaction" by striking out "on or after March 31, 1989" and substituting "in a land title office after March 30, 1989 and before July 1, 1994".

4 The following sections are added:

Definitions in relation to first time home buyers' program

3.2 In this section and in sections 3.21 to 3.27

"eligible indebtedness" means, for a property, an indebtedness that

(a) is secured by eligible securities that are registered against the property, and

(b) is 70% or more of the fair market value of the property as at the date on which the application for registration of the eligible transaction is made at a land title office;

"eligible security" means a mortgage or an agreement for sale that

(a) secures financing applied to a transfer effected by an eligible transaction,

(b) is between the transferee and a person who is not a related individual to the transferee, and

(c) has a term of at least one year from the registration date;

"eligible transaction" means, for the purposes of determining the eligibility of a first time home buyer for an exemption under sections 3.21 to 3.27, a taxable transaction not referred to in paragraph (e) or (f) of the definition of "taxable transaction", for which an application for registration is made at a land title office after the coming into force of this section;

"first time home buyer" means an individual who

(a) is a Canadian citizen or is lawfully admitted to Canada for permanent residence,

(b) continuously maintained that individual's principal residence in British Columbia throughout a period of not less than one year before the registration date, and

(c) has not previously held a registered interest in land, whether in British Columbia or elsewhere, that constituted the individual's principal residence;

"principal residence" means the usual place where an individual makes his or her home;

"property" means a parcel of land and the improvements, if any, in respect of which an application is made for

(a) an exemption under section 3.21 or 3.22, or

(b) a refund under section 3.23;

"qualifying property" means a property the fair market value of which does not, on the registration date, exceed the qualifying value of that property;

"qualifying value", in relation to a property, means

(a) $250 000 if the property is located in the Greater Vancouver Regional District, the Central Fraser Valley Regional District, the Dewdney- Alouette Regional District, the Fraser-Cheam Regional District or the Capital Regional District, or

(b) $200 000 if the property is located elsewhere;

"registration date" means, in respect of an eligible transaction, the date on which the application for registration of the eligible transaction is made at a land title office;

"residential improvement" means, in respect of an improvement constructed on and permanently affixed to a property,

(a) the improvement, if it is intended to be a dwelling, or

(b) if only part of the improvement is intended to be a dwelling, that part of the improvement that is intended to be a dwelling.

First time home buyers' exemption

3.21 (1) Subject to sections 3.22 to 3.27, a transferee who applies for registration of an eligible transaction at a land title office is exempt from the obligation to pay tax under section 2 (1) (a) on that transaction if

(a) the transferee is a first time home buyer,

(b) the transferee applies for an exemption under this section or section 3.22 by tendering with the application for registration an application for exemption, and

(c) eligible securities securing an eligible indebtedness are tendered for registration against the property with the application for registration of the eligible transaction or within 7 days after the registration date.

(2) An application for exemption under subsection (1) shall be in the form required by the minister and shall

(a) include a declaration, in the form required by the minister, by which the transferee declares that the transferee is a first time home buyer,

(b) disclose that

(i) eligible securities securing an eligible indebtedness are to be registered against the property on or within 7 days after the registration date, and

(ii) the property is a qualifying property, and

(c) include a consent, in the form required by the minister, by which the transferee consents to the administrator conducting inquiries respecting the transferee that the administrator considers necessary to confirm the qualifications of the transferee for the exemption.

(3) No tax credit under section 3.1 shall be given in respect of an eligible transaction in relation to which an exemption is applied for under this section or a refund is applied for under section 3.23.

Partial exemption

3.22 (1) Where a qualifying property that is the subject matter of an eligible transaction is larger than 0.5 ha in area, a transferee who qualifies for an exemption under section 3.21 is exempt from the obligation to pay tax under section 2 (1) (a) on that transaction

(a) in respect of that portion of the fair market value of the property that is applicable to the residential improvement in which the transferee establishes a qualifying residence within the meaning of section 3.24 (2) on the property, and

(b) in respect of that portion of the fair market value of the property, not including improvements, that is equivalent to the ratio of 0.5 ha to the total area of the property.

(2) Where a qualifying property not referred to in subsection (1) is the subject matter of an eligible transaction and has improvements on it that are in addition to the residential improvement in which the transferee establishes a qualifying residence within the meaning of section 3.24 (2), a transferee who qualifies for an exemption under section 3.21 is exempt from the obligation to pay tax under section 2 (1) (a) on that transaction

(a) in respect of that portion of the fair market value of the property that is applicable to that residential improvement, and

(b) in respect of the fair market value of the property, not including improvements.

Refund to applicant

3.23 (1) Where a transferee who is entitled to an exemption in respect of an eligible transaction under section 3.21 or 3.22 fails to apply for that exemption on the registration date, the transferee may, within 12 months afterwards, apply to the administrator under subsection (2) for a refund of the tax paid by the transferee on the registration of the transaction.

(2) On receiving an application under subsection (1), the administrator shall,

(a) on being satisfied that the transferee would have qualified for an exemption under section 3.21 or 3.22 on the registration date, pay out of the consolidated revenue fund a refund of that portion of the amount of tax paid by the transferee that is equivalent to the amount of the exemption to which the transferee would have been entitled had the application for the exemption been made on the registration date, or

(b) if not so satisfied, refuse the application and provide written notice to the transferee of that refusal under subsection (3).

(3) If an application for a refund under subsection (1) is refused, the administrator shall send a letter to the applicant stating the reason for the refusal, and the letter is deemed to be a notice of assessment for the purposes of allowing the applicant to file a notice of objection under section 8.

Obligations of transferee

3.24 (1) A transferee who has applied for an exemption under section 3.21 or 3.22 or a refund under section 3.23 shall

(a) establish a qualifying residence on the property within the meaning of subsection (2) of this section,

(b) ensure that eligible securities securing an eligible indebtedness are registered against the property within 7 days of the registration date, and

(c) ensure that in the first 12 months after the registration date the eligible indebtedness is not reduced by more than,

(i) for a property referred to in paragraph (a) of the definition of "qualifying value", $10 000, or

(ii) for a property referred to in paragraph (b) of the definition of "qualifying value", $8 000.

(2) For the purposes of subsection (1) (a), a transferee establishes a qualifying residence on a property if

(a) the property contains a residential improvement on the registration date and the residential improvement constitutes the transferee's principal residence throughout a period beginning on a date that is not more than 45 days after the registration date and continuing to a date that is not earlier than the first anniversary date of the registration date, or

(b) the property does not contain a residential improvement on the registration date, and, within 12 months after that date,

(i) a residential improvement is constructed on the property,

(ii) the transferee inhabits the residential improvement, as the transferee's principal residence, between the time it is completed and the first anniversary date of the registration date, and

(iii) the aggregate of the fair market value of the property as at the registration date and the costs incurred to establish the residential improvement does not exceed the qualifying value of the property.

(3) For the purposes of subsection (1) (b), if a transferee, within 12 months after the registration date, replaces all or any of the eligible securities referred to in section 3.21 (1) (c) with one or more mortgages or agreements for sale, the replacement securities shall be deemed to be eligible securities securing an eligible indebtedness if each of those securities

(a) is between the transferee and a person who is not a related individual to the transferee,

(b) has a term expiring no earlier than the first anniversary date of the registration date, and

(c) is registered no later than 7 days after the cancellation of the eligible security or eligible securities that it replaces.

(4) Any amount by which the replacement indebtedness referred to in subsection (3) is less than the indebtedness it replaces shall be deemed to be a reduction of the eligible indebtedness for the purposes of subsection (1) (c).

Unqualified transferee

3.25 (1) A transferee who has obtained an exemption under section 3.21 or 3.22 or a refund under section 3.23 shall be liable under subsection (2) of this section if and from the time that the transferee

(a) fails or ceases to qualify for an exemption under section 3.21 (1) (a) or (c),

(b) fails or refuses to comply with section 3.21 (1) (b) or (2), or

(c) fails, refuses or ceases to comply with section 3.24.

(2) A transferee referred to in subsection (1) shall pay to the administrator as a tax liability the amount of tax that the transferee would have been obliged to pay under section 2 (1) (a) had the transferee not received the exemption or refund.

(3) A transferee not referred to in subsection (1) who has obtained an exemption under section 3.21 or 3.22 or a refund under section 3.23 for an amount greater than the amount to which the transferee is entitled under this Act shall pay to the administrator as a tax liability the amount by which the exemption or refund received exceeded the exemption or refund to which the transferee was entitled.

(4) A transferee who has obtained a tax credit under section 3.1 in respect of an eligible transaction and who obtains, in respect of the same eligible transaction, an exemption under section 3.21 or 3.22 or a refund under section 3.23, shall pay to the administrator as a tax liability the amount of the tax credit that the transferee received.

Lien for amount of exemption or refund

3.26 (1) In order to secure the amount of the tax liability that a transferee is or may be obligated to pay to the administrator under section 3.25, the administrator may register against the property in the appropriate land title office a lien form claiming a lien conferred by this section in the same manner that a charge is registered under the Land Title Act.

(2) On registration of a lien form against the property under subsection (1), a lien for the amount of the tax liability referred to in that subsection is created on the property.

(3) The lien created under this section expires on the first anniversary date of the registration date unless the administrator, before the expiration of the lien,

(a) discharges the lien, in which event the lien ceases to exist on the effective date of the discharge, or

(b) registers a renewal of lien in the appropriate land title office in the same manner that a charge is registered under the Land Title Act.

(4) A lien created on the property under subsection (2) or renewed under subsection (3) (b) has priority over all other claims of every person except

(a) the eligible securities, and

(b) any other claims secured by liens, charges or encumbrances registered against the property before the date on which the lien form referred to in subsection (1) was registered to create the lien.

(5) Where the administrator registers a lien form in respect of a tax liability under subsection (1) or a renewal of lien under subsection (3) (b) and it is subsequently determined that the amount referred to in the lien form or renewal of lien is different than the amount of the tax liability to which the transferee is or may be obligated to pay to the administrator under section 3.25, the administrator may correct the amount by registering a new lien form or renewal of lien in the revised amount and discharging the original lien form or renewal of lien but for the purposes of subsection (4) the new registration shall be deemed to have been effected at the same time that the lien form that created the lien was registered under subsection (2).

False declaration

3.27 A transferee who obtains an exemption under section 3.21 or 3.22 or a refund under section 3.23 shall pay to the administrator, in addition to the amount of tax that the transferee is obliged to pay to the administrator under section 3.25, a penalty equal to that amount of tax if

(a) the transferee is not qualified under section 3.21 to receive an exemption, and

(b) the administrator determines that the declaration provided by the transferee under section 3.21

(2) or the application for refund provided by the transferee under section 3.23 is false or misleading in respect of the matters referred to in paragraph (c) of the definition of "first time home buyer".

5 Section 7 is amended by adding the following subsection:

(5.2) Where an exemption has been applied for under section 3.21 or 3.22 or a refund has been applied for under section 3.23, the assessment may be issued within 24 months after the application for registration of the eligible transaction in relation to which the exemption or refund was applied for.

6 Section 8 is amended

(a) by adding the following subsection:

(1.1) A person who objects to a refusal by the administrator to grant an exemption under section 3.21 or 3.22 or to pay a refund under section 3.23 or to the imposition of a penalty under section 3.27 shall mail a notice of objection to the minister within 90 days after the date shown on the notice of assessment. , and

(b) in subsection (3), by striking out "tax owing." and substituting "the penalty or tax owing or the refund payable, as the case may be."

7 Section 22 is amended by renumbering the section as section 22 (1) and by adding the following subsection:

(2) Each of the following shall provide assistance and access to their records to the administrator free of charge for the purpose of assisting the admin istrator in determining the past and present principal residences of an individual who applies for an exemption under section 3.21 or a refund under section 3.23:

(a) British Columbia Hydro and Power Authority;

(b) Home Owner Grant Administration Branch of the Ministry of Municipal Affairs;

(c) Motor Vehicle Branch of the Ministry of Transportation and Highways.

8 Section 26 (3) is repealed and the following substituted:

(3) Regulations that may be made under this Act may be made retroactive to March 20, 1987 or such later date as the Lieutenant Governor in Council may determine and a regulation made retroactive is deemed to come into force on the date specified in the regulation.

Commencement

9 (1) Sections 1 (b) and (c) and 2 are deemed to have come into force on January 31, 1994 and are retroactive to the extent necessary to give them effect on and after that date.

(2) Sections 1 (a) and 3 to 8 are deemed to have come into force on March 23, 1994 and are retroactive to the extent necessary to give them effect on and after that date.

 
Explanatory Notes

SECTION 1:

(a) includes within the meaning of "tax", as defined in the Property Transfer Tax Act, penalties imposed under that Act or its regulations;

(b) adds to the definition of "taxable transaction" in the Property Transfer Tax Act a series of lease transactions that create terms that, in aggregate, extend for more than 30 years;

(c) includes as a transferee, within the meaning of the Property Transfer Tax Act, a person who, under an option to lease, gets the right to enter into a lease agreement for a term that is not included within the term of another lease agreement.

SECTION 2: establishes the basis on which tax is to be collected in respect of a taxable transaction referred to in paragraph (f) of the definition of "taxable trans action" in the Property Transfer Tax Act as enacted by section 1 of this Bill.

SECTION 3: limits the tax credit system set out in section 3.1 of the Property Transfer Tax Act to eligible transactions for which application for registration is made before July 1, 1994.

SECTION 4: creates an exemption from tax for first time home buyers and sets the criteria under which the exemption may be claimed and retained.

SECTION 5: provides for a 24 month assessment period for the assessment of applications for an exemption or refund under sections 3.2 to 3.27 of the Property Transfer Tax Act as enacted by section 4 of this Bill.

SECTION 6: provides for appeals in respect of the first time home buyers' exemption provisions enacted by section 4 of this Bill.

SECTION 7: provides that the administrator may seek and obtain information from specified bodies in respect of the eligibility of an applicant for a first time home buyers' exemption or refund.

SECTION 8: permits regulations to be made retroactive to March 20, 1987 or such later date as may be necessary to accord with amendments to the Property Transfer Tax Act.


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