Canada Revenue Agency probes tax loopholes in real estate speculation

The Canada Revenue Agency is looking deeper into tax evasion in some of the country's hottest housing markets after reports suggesting many speculators are abusing the system and not paying enough tax on their gains.

The move comes after a Globe and Mail report last week on a Vancouver property speculator who paid virtually no tax on gains from millions of dollars worth of home flips during the same calendar year.

"Like all Canadians, I am very concerned over allegations that some wealthy Canadians are not paying their fair share of taxes," Diane Lebouthillier, minister of national revenue, said in a statement."That is unacceptable and I've since asked Canada Revenue Agencyofficials to look into the specifics of the case."

Frothy market

Foreignmoney in Canada's housing market has been a hot topic of late, as policymakers seek to get rid of some of the excess speculation without starting a panic.The provincerecently implemented a 15 per cent tax on foreign buyers in the Greater Vancouver Area, andthe issue ofthe capital gains exemption on a primary residence hasalso drawn scrutiny from the CRA and other agencies.

Lebouthillier saidthat between April of last year and June 2016, the CRA had conducted 2,500 audits related to real estate in British Columbia and Ontario, and levied some $11.6 million in penalties to tax filers who were subsequently found to have demonstrated"gross negligence in failing to report their tax obligations correctly."

"Those trying to avoid paying their tax obligations now face an increasing likelihood of getting caught," she said. "Canadians expect and deserve a fair tax system and that is what we are committed to delivering."

• Ottawa gives Statistics Canada $500,000 for better info on housing

Prime Minister Justin Trudeauaddressed the topic of tax leakage in the housing marketlater onTuesday afternoon, when asked by a journalist at a press conference for his thoughts.

"One of the issuesthat we highlighted recently is the need for continued enforcement of the tax codeand making sure that we're cracking down on people who are avoiding paying their fair share of taxes," he said, adding that the government earmarked more than $400 million in the last budget to beef up the CRA's ability to "make sure that there is better enforcement [so that] everyone pays their fair share of taxes."