Nanaimo homeowners must file declaration to avoid being hit with speculation tax

By Dominic Abassi
January 16, 2019 - 6:01pm

Finance Minister Carole James has touted the speculation tax as a tool to improve housing affordability.BC Government

Nanaimo homeowners will have to prove they are not real estate speculators to avoid being slapped with a tax bill from the provincial government.

The NDP government announced this week all people who own residential property in areas hit with the speculation and vacancy tax, like Nanaimo, will have to submit a declaration seeking exemption from the tax. Owners who don't complete their declarations by a March 31, 2019 deadline will be sent a tax notice of assessment, a government release said.

Kris Sims, BC director for the Canadian Taxpayers Federation, said it's a "mind blowing" announcement from the government.

"The idea you would be labeled a speculator unless proven otherwise, every single year by taking 20 minutes to fill out government paperwork...is outrageous and I'll be surprised frankly if the government doesn't back down on this within a week."

Sims said the mechanism for applying the tax is effectively negative billing or opt-out taxation.

"The initial statement from the finance minister was that 99 per cent of British Columbians in these zones don't need to worry about the speculation tax. Now all of a sudden they sure as heck do. This is just ham-fisted and the wrong way to go."

Legislation for the tax was introduced in October of last year, with the NDP government calling it a tool to cool B.C.'s overheated housing market, increase rental stock and target foreign and domestic speculators who own homes in the province but don't pay tax here.

Revenue from the tax is intended to be used for affordable housing projects in communities where it applies, the government said.

For 2018, British Columbians who either live in their home as their principal residence or rent out their property for at least three months of the year will be exempt from the 0.5 per cent tax on assessed value.

The tax was applied to select jurisdictions including Nanaimo, Lantzville, Kelowna, the Capital Regional District, and Metro Vancouver. Parksville and Qualicum were originally included, but removed after extensive backlash.

The government said Tuesday letters detailing the exemption process should arrive by the end of February. The declarations must be completed annually and each owner of a home must fill one out, even if the owners are spouses.

Sims said the entire process creates massive potential for mistakes and "bureaucratic bungling."

She said seniors who might live in the U.S. for a portion of the year, those working out of province or people who simply discount the letters as junk mail are prime candidates to fall through the administrative cracks.

"Then all of a sudden you're hit with this huge tax bill and then you look forward to a fight with Victoria to straighten it all out? That's really unfair."

The province could have used many other methods to apply the tax, Sims said, including using homeowner information already on file or the existing tax system.

The Ministry of Finance told NanaimoNewsNOW any homeowner who should be exempt from the tax won't have to pay it.

"If someone receives a tax notice because they did not complete their declaration, the notice will ask homeowners to contact the Ministry if they think they received it in error. If they are exempt, the homeowner won’t have to pay the tax," the Ministry said.

It said the process chosen mirrors the existing homeowner grant program B.C. residents are familiar with already and the empty home tax process in Vancouver.

Residential property owners who don't receive a letter by Feb. 28 should reach out to a government call centre at 1-833-554-2323. You can get more information here.

 

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On Twitter: @domabassi

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