World-leading legislation introduced by the provincial government will help bring an end to the days when B.C. could be used by shell companies and other legal entities to anonymously hide wealth, evade taxes and launder money.
The land owner transparency act, when passed, will establish a public registry of beneficial owners of property in B.C., meaning true ownership will no longer be hidden. The act will require corporations, trusts and partnerships, which currently own or buy land, to disclose their beneficial owners in the registry. Corporations, trusts and partnerships that fail to disclose could face fines of up to $100,000 or 15% of the assessed property value, whichever is greater.
“For years, the previous government did not act, while people used numbered companies, trusts and partnerships to hide who really owns property in B.C.,” said Carole James, Minister of Finance. “Their decisions led to B.C.’s international reputation as a place to anonymously invest wealth and left the real estate sector open to tax evasion, fraud and money laundering.
“This registry will make information about the true owners of B.C. real estate publicly available and help crack down on illegal activities. It is one of the key steps our government is taking to ensure homes in B.C. are used for people, not speculative investment or money laundering.”
In 2016, Transparency International Canada released a report indicating that nearly one-third of the 100 most valuable residential properties in Greater Vancouver were owned by shell companies. Data leaks, such as the Panama Papers and the Paradise Papers, have provided further examples of how loopholes have left Canada exposed.
British Columbia’s new beneficial ownership registry is Canada’s first publicly searchable registry of its kind. Information, including names of all corporate interest holders, beneficial owners or partners, will be publicly searchable through the registry. Tax authorities, law enforcement agencies and relevant regulators will have access to more detailed information and may use it to crack down on tax evasion, fraud and money laundering.
“Requiring companies, trusts and partnerships to disclose their controlling shareholders, beneficial owners and partners protects the public by letting everyone know who they are dealing with in B.C.’s real estate market,” said Nancy Merrill, president of the Law Society of BC. “This groundbreaking move by the B.C. government will increase the transparency of land ownership in B.C. and make it more difficult to use such arrangements for tax evasion, fraud and money laundering. British Columbians will benefit from a fairer and more transparent real estate market.”
In addition, the B.C. government is introducing amendments to the Business Corporations Act to crack down on tax evasion and money laundering by requiring private companies to hold accurate and up-to-date information about the true owners of their shares, and eliminating bearer shares, which are unregistered shares owned by the certificate holder.
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A backgrounder follows.