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CRA nets $240M from probe of real estate tax cheats in B.C., Ont.

The Canada Revenue Agency says it has recovered more than $240 million from audits related to probes of tax cheating on real estate in British Columbia and Ontario.

According to figures published on the CRA’s website, the bulk of the money comes from probes in Ontario, where the federal department has recovered $210.4 million through more the 13,400 audits conducted between April 2015 and September 2016.

More than 10,900 of those Ontario audits are related to the GST/HST New Housing and New Residential Rental Property rebates, and resulted in $143.9 million in recoveries.

Meanwhile, the CRA says it has recovered $30.3 million from 2,366 audits in British Columbia, with more than half of that money related to GST/HST fraud probes.

CRA has also imposed $12.5 million in penalties. In the event a taxpayer knowingly makes a false statement when filing a return, the CRA can apply a penalty equal to 50 per cent of the additional tax payable. Between April 2015 to September 2016, the CRA applied 663 penalties, with the biggest one hitting almost $2.5 million.

Focus on B.C.

In July, CRA confirmed to CBC that it was bulking up its scrutiny of the B.C. real estate market, which had been seeing a feverish run-up in house prices in Vancouver.

“These audits focused on the areas where the risk of non-compliance was highest, mainly related to property flips and GST/HST non-compliance,” the agency said back then.

“The real estate project was not undertaken to address questions of housing affordability. The CRA does not have any role to play concerning the affordability of real estate …Transactions in the Greater Toronto Area have been the subject of greater scrutiny for a number of years. More recently, the CRA has been actively monitoring and auditing real estate transactions in British Columbia.”

The agency says it doubled its efforts in B.C. in 2015, and started a review of 500 “high dollar-value” real estate transactions in B.C. that year to find any unidentified tax issues.

Despite that increased focus on the B.C. market, Ontario still accounts for a disproportionate number of audits when the populations of the two provinces are compared.

The federal revenue minister said the government is aiming to recoup more money in B.C.

“We are making a clear effort in British Columbia and our goal is to recover as much money [as in Ontario], if not more,” Diane Lebouthillier told the Globe and Mail.

According to CRA, it is looking into five areas of concern, including:

  • Questionable source of funds.
  • Property flipping.
  • Unreported GST/HST on the sale of a new or substantially renovated property or on the GST/HST new housing rebate.
  • Unreported capital gains.
  • Unreported worldwide income.

Article source: http://www.cbc.ca/news/business/cra-audits-real-estate-1.3813584?cmp=rss