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Sunday, September 26, 2021

CRA study from 1996 found migrants bought B.C. luxury homes despite having low incomes


A study conducted by the Canada Revenue Agency in 1996 and finally released 25 years later found a majority of homes bought in Burnaby and Coquitlam were purchased by rich immigrants who were declaring minimal global incomes, possibly laying the foundation for Vancouver’s current housing crisis.

The documents were first obtained by South China Morning Post reporter Ian Young, who noted that long-term Canadians who were making luxury homes within the same price-bracket were declaring incomes 16 times higher.

Young said he was shocked by the number of purchasers who had incomes that would be typically in line with those of refugees.

“One of the biggest shocking things to me was the average incomes that were being declared by these millionaire migrants who were buying these multi-million dollar homes.”

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He had initially submitted an information and privacy request for the study in 2016 on behalf of his news outlet and only received the full documents in late August of this year.

“This was a five-year wait, it’s something I’d never heard of,” Young said. “It’s really quite phenomenal.”

The Canada tax agency study showed that, during a two-month period in 1994, 33 out of 37 named buyers of Burnaby luxury homes worth more than $800,000 were recent immigrants, whose average declared household global income was only $16,430. Young said the income declared by the four named long-term residents within that same timeframe was $263,701 for the same class of properties.

There were actually more than 40 purchases made during the period, but the CRA was not able to locate the names of all purchasers.

One of the biggest discrepancies in the data showed one buyer purchasing a $2.88-million home but only declaring a global income of $174 in 1994.

Another buyer who bought a Burnaby home worth $1.18 million declared less than nothing: negative $3,997.

For the Coquitlam homes listed in the CRA study, the average recent immigrant income was listed as $33,785 for homes worth more than $600,000.

In one case, a buyer who purchased a Coquitlam house for $1.178 million declared a negative global income of $19,582.

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Young believes the same structure exists today, allowing wealthy immigrants to purchase property without accurately disclosing their global income.

“It’s very hard for the CRA to find out what someone owns and earns in China. There just isn’t the data flow. Sometimes that becomes impossible to trace, so it becomes hard,” Young said.

“There was a crackdown in the mid-2010s, but I don’t know how far it got. That’s hard to say because They don’t like talking about it.”

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Housing analyst Steve Saretsky believes there’s still no level playing field decades later, saying most banks look at foreign home buyers’ assets and not their global income.

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“They just look at your high net worth, so if you’re a high net worth individual, with a 35 per cent down payment, and you can show a good chunk of assets, then it’s easy to get mortgages.”

“Whereas if you’re a local high-income earner, you’re paying 50 per cent-plus in tax rates. So it’s very difficult to earn a high income in Canada and then save enough money, after tax income, as a down payment,” Saretsky said.

“It certainly puts local Canadians at a disadvantage if you are here locally earning and paying income tax rates.”

View the full 85-page document below.

Canada Revenue Agency ATIP … by amyjudd




© 2021 Global News, a division of Corus Entertainment Inc.





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