From: AlanBaggett@volcanomail.com   
      
   Foreign investors avoid taxes through Canadian real estate : CRA SOTW   
      
   Wealthy buyers taking advantage of loopholes by putting homes in the name of   
   relatives or corporations    
      
   Kathy Tomlinson    
   The Globe and Mail Last updated: Wednesday, Oct. 07, 2015 5:22PM EDT   
      
   A Beijing-based private equity manager who bought a $2.3-million home in the   
   hot Vancouver real estate market said he did that while earning just $19,000 a   
   year. He also wired nearly $2-million to his family in Canada during the same   
   period.    
      
   Jing Sun is among several foreign investors who bought property in Canada in   
   recent years, but kept the extent of their wealth out of view of the tax   
   authorities and the courts, a Globe and Mail investigation has found.    
      
   The Globe's findings come amid a controversy in Vancouver, where many blame   
   foreign buyers for soaring house prices that have made a single-family home   
   unattainable for some long-time residents. The Urban Development Institute   
   will tackle the topic for    
   the first time in a sold-out public forum on Wednesday in Vancouver.    
      
   The subject became an election issue when Conservative Leader Stephen Harper   
   promised to collect data on foreign ownership of Canadian real estate and to   
   consider new taxes and regulations to keep housing affordable.    
      
   An in-depth look at public data - including land titles, tax reporting and   
   court records - revealed a distinct pattern, suggesting the typical wealthy   
   foreign family buying Vancouver real estate pays little or no income or   
   capital gains tax.   
       
   "I actually have clients in this circumstance," said David Chodikoff, a   
   Toronto tax lawyer who was a prosecutor but now defends clients who have   
   trouble with the Canada Revenue Agency.    
      
   He is among several experts who said most wealthy foreign buyers are not   
   breaking the law, but simply using tax avoidance manoeuvres or loopholes in   
   the system.   
       
   "They love to take advantage of Canadian tax law ... and it is happening in   
   other communities too," Mr. Chodikoff said.    
      
   Many of the houses being snapped up are not huge mansions. Increasingly, they   
   are family homes priced out of reach for locals whose taxes pay for public   
   services, and some of whom earn more than the incomes reported by buyers such   
   as Mr. Sun.    
      
   Court records show Mr. Sun's wife lived without him in their pricey Vancouver   
   home for six years while he sent her $260,000 a year from China. They paid   
   $40,000 a year for their children to attend private school in Canada.    
      
   When the couple broke up, Mr. Sun stopped supporting the family. In his   
   divorce case last year, he claimed he had been making $19,000 a year. The   
   court asked for tax and other financial records, but he failed to produce any,   
   the documents say.    
      
   He said his money was loans from friends and family in China. The judge did   
   not believe that, saying his bank would not have approved his financing if he   
   had no wealth of his own.    
      
   "In my view, the respondent has yet to overcome the unlikelihood ... of a bank   
   advancing him over $1-million [in a home mortgage] on the basis of a $19,000   
   salary," B.C. Supreme Court Justice Emily Burke said last year.    
      
   Accountants and tax lawyers say it is common for investors from China to pay   
   no income tax in Canada while moving their wealth to Canada through spouses   
   and children here.    
      
   The Globe discovered one in three multimillion-dollar homes bought recently in   
   Vancouver areas popular with foreign buyers is registered to a homemaker,   
   student or corporation - one indicator of how the identity of the person who   
   actually paid can be    
   hidden.    
      
   When a spouse or child sells a property that is registered in their name, the   
   real investor can avoid capital gains taxes - because the relative in Canada   
   can claim it was their primary residence, therefore not an investment.    
      
   Other revealing data came from Statistics Canada, which tracks income that   
   households report to the CRA.    
      
   In the Vancouver area of Dunbar, which realtors said is a top neighbourhood   
   for Chinese clients, one in four of what Statscan calls "couple families" -   
   excluding seniors - declared income of less than $35,000 in 2013. That puts   
   them in the lowest tax    
   bracket.    
      
   Given that the municipal property taxes on a $2-million to $3-million home are   
   about $10,000, those reported income levels are questionable.    
      
   Land titles records on 250 houses bought in the past two years for more than   
   $2-million in key Vancouver neighbourhoods indicate that 85 per cent of those   
   new owners have Chinese names. There is no way to tell how many are Canadian.   
    However, 2014 statistics from Macdonald Realty and ReMax show that 70 per   
   cent of their clients were from mainland China.    
      
   The records list the occupations of non-corporate owners. The most frequent is   
   "business person." The next is "homemaker," then "student."    
      
   "When you sift through the information, you find that the wife [or student]   
   has no income ... there is no possible way they could afford to purchase the   
   home," Mr. Chodikoff said.    
      
   Several of the houses visited by The Globe appear to be unoccupied, with   
   cobwebs at the front entrance and mail piled up.    
      
   One of the few owners who answered the door was a 25-year-old University of   
   British Columbia science major who did not want to be identified. "My parents   
   bought the house - for me to study here," she said.    
      
   She is the registered owner of the $2-million home - but she said her parents   
   live there too when they are not in China on business. "After I study, they   
   will sell again."    
      
   One of the more expensive homes bought last year - in Point Grey - is   
   registered to a student who is not living there. It was bought for   
   $4.8-million and has a stunning view of the mountains. It changed ownership   
   three times in five years and is now    
   empty.    
      
   The Globe found five out of 13 properties owned by students are empty and four   
   are rented out, suggesting they were bought as investments.    
      
   A family friend picking up the mail at one house said the real owner is a   
   business person in China who will not be in Canada for months. At another   
   empty student-owned home, the backyard pool is filled with dirty water and   
   garbage.    
   Many of the properties registered to homemakers are occupied. Several family   
   members at those homes indicated the heads of the households are transferring   
   wealth to Canada - because it is seen as a small, clean, inexpensive haven.    
      
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