Canada Revenue Agency (CRA) audits of real estate transactions — primarily associated with the Toronto and Vancouver real estate markets between April 2015 and March 2017 — have resulted in more than $329.4 million in assessed income that had gone unreported and more than $17 million in penalties, the federal tax agency announced on Friday.
"Our government has committed to protecting the fairness and integrity of the tax system for all Canadians, notably by cracking down on tax cheating in real estate transactions," says Diane Lebouthillier, the minister of national revenue, in a statement announcing the results of the real estate tax crackdown.
The CRA has increased its real estate audit activity in both greater Vancouver and Toronto in recent years as the federal tax agency observed greater real estate speculation in these markets. The CRA announced it had completed more than 21,000 files related to real estate, with files selected for audit based on the risk of non-compliance.
In addition, starting with the 2016 taxation year, the government tightened the rules around the principal residence exemption (PRE), including requiring that Canadians report to the CRA the sale of any principal residence to ensure that only eligible homeowners get tax benefits. Previously, administrative policy allowed homeowners to claim the PRE without reporting in most cases.
The CRA also said it planned to continue enhancing its compliance procedures in the real estate sector, including strengthening relationships with provinces, territories and municipalities to further expand, obtain and exchange information on real estate transactions.