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

1 The short title of this Act is the "Property Transfer Tax Act Amendment Act".

2 Section 1 (1) of the Property Transfer Tax Act, R.S.B.C. 1996, c. 378, is amended by adding the following subsections to the definition of "taxable transaction":

(h) purporting to transfer or grant or assign, by any method, an agreement for sale that grants a right to require the transfer of an estate in fee simple, or require the transfer of a strata property, before the closing date of that agreement for sale;

3 Section 2 is amended by:

(a) adding the following subsections:

(1.2) if the purchaser in an agreement for sale assigns that agreement for sale to a third party, that purchaser must pay tax to the government in accordance with section 3 or 38, and file a return, in the prescribed manner, as if he or she had completed the agreement for sale and made application for registration at a land title office, within 30 days of the effective date of the assignment;

(1.3) if the assignee of an agreement for sale does not complete the agreement for sale, and instead assigns that agreement for sale to a third party, that assignee must pay tax to the government in accordance with section 3 or 38, and file a return in the prescribed manner as if he or she had completed the agreement for sale and made application for registration at a land title office, within 30 days of effective date of the assignment;

4 The section 1 definition of "fair market value" is amended by:

(a) adding the following subsections:

(h) (i) in the case of an assignment described in section 2(1.2) the fair market value is deemed to be the listed price on the agreement for sale;

(ii) in the case of an assignment described in section 2(1.3) the fair market value for section (1) is deemed to be the listed price on the agreement for sale, plus the sum total of all assignment fees or additional consideration paid by the assignee;

(iii) in the case of assignment in section 2(1.2) and 2(1.3), where the transferor is not a corporate person and is assigning the contract of sale due to catastrophic illness diagnosed, disabling injury suffered, or loss of employment commencing after the effective date of the agreement for sale, the transferor must still satisfy all requirements of this Act, but may apply with any supporting documentation to the administrator to request that value of the property being assigned be deemed to be zero for the purposes of their personal tax liability under this Act;

(i) in the case of a conveyance of land from a trustee (whether or not the trustee is so described in the conveyance) to a person to whom or for whose benefit any equitable or beneficial interest in the land has been transferred by a conveyance or conveyances that have not been registered, the fair market value is as determined as if the interest is registered in respect of the unregistered conveyances made to such person;

(j) in the case of a conveyance of land from a trustee to another trustee (whether or not either trustee is so described in the conveyance) where,

(i) the person to whom or for whose benefit any equitable or beneficial interest in the land is held is not the same person to whom or for whose benefit any equitable or beneficial interest in the land was held by the trustee making the conveyance when that trustee first acquired legal interest in the land, and

(ii) valuable consideration has been given by the transferee of an equitable or beneficial interest for the transfer of any equitable or beneficial interest in the land held by the trustee making the conveyance while that trustee was the holder of the legal interest in the land,

the fair market value is the value ascertained at the time of the tender or submission for registration of the land to which the conveyance extends.

5 The following sections are added:

Disposition of beneficial interest in land

3.2  (1) For the purposes of this section, a disposition of a beneficial interest in land includes,

(a) a sale, transfer or assignment, however effected, of any part of a beneficial interest in land; and

(b) any change in entitlement to or any accretion to a beneficial interest in land,

but does not include,

(c) a transfer of a beneficial interest in land which occurs by reason of the death of the owner of the interest, if the transfer is not required to be made under the terms of an agreement enforceable by or against the person legally or beneficially entitled to the interest immediately following the death of the owner;

(d) a transfer or assignment of a beneficial interest in land by a debtor to a creditor for the purpose only of providing security for a debt or loan and a transfer or reassignment by the creditor to the debtor of the security;

(e) a lease of land or a transfer of the interest of a lessee under a lease of land if, at the time of the disposition, the unexpired term of the lease cannot exceed 50 years, including any renewals or extensions of the term provided for in the lease or in a separate option to lease or other document entered into as part of the arrangement relating to the lease (whether or not the lessee and the optionee or person named in the document are the same persons).

Tax on disposition of a beneficial interest

(2) If there is a disposition of a beneficial interest in land, tax at the rates otherwise determined under section 3 is payable on the thirtieth day after the date of the disposition as if the disposition were a conveyance of land tendered for registration.

By whom payable

(3) The tax under subsection (2) is payable by every person who acquires a beneficial interest in land or whose beneficial interest in land is increased as a result of the disposition.

Multiple interests

(4) If more than one person acquires a beneficial interest in land, or more than one person’s beneficial interest in land is increased as a result of the disposition, each of them is liable to pay only that percentage of the tax otherwise payable under this section that reflects their proportional share of the acquisition of or increase in beneficial interest.

Explanatory Note

This Bill closes two unfair loopholes in the Property Transfer Tax Act. The first clarifies the intent of the existing Property Transfer Tax that the Property Transfer Tax is required to be paid by so-called Shadow Flippers each time an agreement for sale is assigned, even if the assignment is not registered in the Land Registry. The second clarifies the effect of transferring a beneficial interest of a trust as a taxable transaction captured by the Act. The bill does not propose new taxes, but instead ensures the fair application of existing taxes to everyone, including speculators and large institutional commercial property investors who have been permitted to operate with unwritten exemptions from the tax by the Provincial Government.