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Canadian Tax & Legal -Real Estate Taxes in British Columbia16 January 2020

2© 2020 Yang Chan & Jamison. All rights reserved.

Introduction

© 2020 Yang Chan & Jamison. All rights reserved. 3

Yang Chan & Jamison 勤信律师事务所 is an independent Hong Kong law firm, and is associated with Deloitte Legal. Our lawyers, who are licensed to practice Hong Kong law, not only have strong local ties but also a wide vision. Our local roots and global reach make us a unique service provider in the Greater China's marketplace.

Our solutions are tailored not only to address Hong Kong and China legalissues but also to cater for legal considerations outside our region. Clientshave found our cross-border advice insightful and comprehensivebecause of our access to global resources across various jurisdictions anddiversified disciplines, including business, tax, finance and accounting,mergers and acquisitions, risk management and consulting.

Working with the Deloitte Legal global network that offers services in 82countries with a team of over 2,000 legal professionals and other highlyqualified law firms, we can cater to the legal needs of our clients invirtually every major location across the world.

Introduction of Yang Chan & Jamison


Legal Services in Hong Kong

Corporateand M&A

CommercialLaw

EmploymentLaw

Legal ManagementConsulting

Private Client Service

M&A Transactions Commercial Contracts Compensation & Benefits Legal Department Strategy & Operations

Tax and Estate Advisory

Integrated Due Diligence Data Protection and Privacy

Individual Employment Law

Legal Technology Consulting

Estate Administration

Regulatory Compliance Loan and Finance International EmploymentRemodeling

Legal Risk Management Family Trusts Setup

Corporate Restructuring Real Estate Employment Visa Corporate Entity Management

Wills & Probate

Shareholders Agreement & Joint Ventures

PRC Attestation HK & US Immigration Business Integrity Charities Contribution

Corporate Law, CorporateGovernance

Tips-off Anonymous™ US Tax Controversy

Solutions that are pioneering, yet pragmaticNearly every aspect of a modern organization has major legal considerations. Successfully managing them requires intuitively understanding your geographies, your industry and your business model, and then knowing how to turn perspective into strategy.


Introduction of Our Team


Victor YangManaging Partner

• Email：

[email protected]

• Direct: +852 2852 6623

Victor has decades of legal experience focused on corporate and

commercial, mergers and acquisitions, securities and public listings and

private wealth areas. He has acted for clients in many large cross

border M&A transactions in the hospitality, media, property, food and

restaurant businesses and assisted initial public offering of business in

the shipping, container manufacturing, logistics, hotels and

telecommunication industries.

Prior to joining Yang Chan & Jamison., he was until 2017 the Managing

Partner of a leading law firm in Hong Kong and a Director Emeritus of

TerraLex, a global network of independent law Firms. He was a

founding Partner of the Canadian law firm Boughton Peterson Yang

Anderson, the first Canadian law firm approved by the China Ministry of

Justice in 1992 to be licensed as a foreign law firm in China, and was

the Chief Representative of the firm's representative office in Shanghai.

Victor had served as a director in 13 companies listed publically on

stock exchanges in the United States of America, Singapore and Hong

Kong.

Education:

Qualification:

• TerraLex Leadership Education, Executive Leadership Program, Harvard Law School

• Juris Doctorate, The Faculty of Law, University of British Columbia, Canada

• Bachelor of Commerce, University of British Columbia, Canada

• Admitted as Solicitor of the Hong Kong High Court

• Barrister and Solicitor, The Law Society of British Columbia, Canada

• Solicitor, The Law Society of British, UK

mailto:[email protected]


Peter Guang ChenPartner

• Email：[email protected]

• Mobile: +852 6990 3998

Peter is both a certified public accountant and an attorney with more

than 20 years of experience in tax advisory and planning. He has

advised China, Hong Kong and US and other multinational corporations

and high net worth individuals on their inbound and outbound

transactions, China and international tax issues, investment

structuring, regulatory, and business issues; mergers , acquisitions;

and the reorganizations of multinationals in China and the Asia Pacific

region; structuring of trusts, foundations, estate planning and asset

preservation for individuals. He has represented companies and

individuals to resolve tax disputes with tax authorities in China and the

US.

Recently, Peter has been engaged by the Ministry of Finance of a

Southeast Asian nation to draft the country’s tax regulations and to

provide consulting on international tax matters.

Previously, Peter was with a major economic consulting firm and also

was a tax partner at Deloitte US, where he was responsible for the

China Desk in New York, and served as China leader at the firm’s

International Centre of Excellence.

Education:

Qualification:

• LL.M. (Taxation), New York University• M.B.A. (Taxation), New York University• BS (Accounting & Economics), New

York University • J.D. (Law) degree, Fordham University


• Admitted as attorney in United States (New York & New Jersey), United States Tax Court, Federal District Court (SDNY, EDNY, NJ)

• Certified Public Accountant (“CPA”) in New Jersey and New York State.



Danny LauPartner

• Email：

[email protected]

• Direct: +852 2852 1609

• Mobile: +852 6094 5996

• Wechat: dlauzlhk

Danny is the common partner of the Hong Kong and China member firms

of the Deloitte Legal global network, namely, the newly established Hong

Kong law firm, Yang Chan & Jamison. and the PRC law firm, Shanghai Qinli

Law Firm.

Danny has many years of legal experience advising on cross-border

mergers and acquisitions, corporate finance and general corporate

commercial matters. He also advises on regulatory and compliance issues

relating to listed companies, investment advisers, banks and trustees

under the Hong Kong securities laws, including the Listing Rules and the

Takeovers Code. Danny has a particular focus on healthcare-related

acquisitions and compliance matters given his past experience in co-

founding and managing a regional dental practice in Hong Kong.

Danny is one of very few Hong Kong lawyers who passed the PRC bar exam

in his first attempt and became dually qualified to practice laws in both

Hong Kong and the mainland China. Prior to joining Yang Chan & Jamison.,

Danny was a corporate partner in a leading award-winning law firm in Hong

Kong.

Education:

Qualification:

• Postgraduate Certificate in Laws (PCLL), University of Hong Kong

• Bachelor of Laws (LLB), University of Hong Kong

• Bachelor of Social Sciences (Government and Laws), University of Hong Kong

• Early Admission Scheme, University of Hong Kong


• Admitted to the PRC bar• Specialist Certificate (Corporate Finance),

Hong Kong Securities Institute• The Advanced Diploma in International

Taxation (ADIT), Chartered Institute of Taxation, United Kingdom



Winnie ChiuPartner

• Email：

[email protected]

• Direct: +852 2852 1953

Winnie has extensive experience in Succession Planning, Will, Trust and

Probate related matters. She also handles disputes between

beneficiaries; beneficiaries and the executor/administrator/trustee.

Winnie is a frequent speaker at seminars in Hong Kong, PRC and

overseas in relation to succession planning for trustee companies,

bankers, investment advisors, accountants, lawyers and high net worth

individuals.

Winnie also has solid experience in handling contentious and non-

contentious employment matters as well as anti-discriminations, sexual

harassment and personal data privacy related issues arising from

recruitment, merger & acquisition, restructuring and/or post-

termination restrictive covenants. She regularly conducts seminars and

training sessions for HR directors, professionals and management of

international companies.

Prior to joining Yang Chan & Jamison, Winnie had acted as a partner of

various leading law firms, and she had also worked as an in-house

lawyer for an international trustee company in Hong Kong.

Education:

Qualification:

• Diploma in International Trust Management (Distinction), Society of Trust & Estate Practitioners (STEP)


• Bachelor of Laws (Hons), University of Birmingham, United Kingdom

• Bachelor of Arts (Hons), University of Hong Kong

• Admitted as Solicitor of the High Court of Hong Kong

• Admitted as Solicitor of the Supreme Court of England and Wales (non-practising)

• Member of the Society of Trust & Estate Practitioners (STEP)



Keith JacobsenConsultant

Keith Jacobsen is a consultant of Yang Chan & Jamison, which is the Hong Kong member of the Deloitte Legal

global network.

Keith has over 25 years of legal and corporate finance experience advising on corporate finance matters, listing

applications (i.e. initial public offering), M&A and general corporate commercial matters. He also advises on

regulatory and compliance issues relating to listing applications, post-listing matters, including the Listing Rules

and the Takeovers Code. In addition to being a Responsible Officer (“RO”) for type 1 and type 6 regulated

activities and having extensive experience with investment banks holding full type 1, 4, 6 and 9 licences, Keith is

fully cognizant of the licence application process and the regulatory framework of licenced corporations, including

the latest SFC requirements and documentation for licence application such as the requirements for type 4 and

type 9 ROs/MICs/Compliance Officer, FRR requirements, internal control and KYC procedures, Chinese walls,

preparation of business plan and compliance manual etc. Keith is also currently advising another client in its type

4 and type 9 licence application.

Before joining our firm, Keith also worked in Evergrande Group (3333.HK) as the head of internal legal

department and advised on the company’s pre-listing legal matters and rounds of strategic investments. He also

worked on the IPO of CTF Jewellery Group (1929.HK), a major and listed jewellery retail and manufacturing arm

of CTF Holdings Limited headquartered in Hong Kong, as its financial advisory consultant, and prepared the

company for its main board listing application and provided strategic financial and legal advice to ensure its

successful listing on the main board of Hong Kong Stock Exchange.

Education:

Qualification:

• Master of Business Administration, University of British Columbia


• Bachelor of Laws (LLB), University of Hong Kong


• Responsible Officer of Type 1 and Type 6 licenses of the Securities and Futures Commission, Hong Kong

• Fellow of Hong Kong Institute of Directors (FHKIoD)


KC LiConsultant

• Email：[email protected]

• Direct: +852 2852 5879

Mr. Li is admitted to practise law in Washington State (1981), British Columbia (1981),

England (1992), Hong Kong (1992) and Republic of Nauru (1997). He is also an

appointed - attesting officer by the Chinese Department of Justice (2003).

Mr Li is a speaker at Notary Club, Lions Club, Bar Association ,TV and radio station on

social and immigration topics in Taiwan, Hong Kong , Vancouver and Seattle. He also

has written articles on immigration for professional journals and newspapers.

Besides practicing the law, Mr. Li is also actively involved in the community.

Education:

Qualification:

• Admitted to practise in the Republic of Nauru, England and Wales, Hong Kong, Province of British Columbia, Canada

• Practise in Washington State before the State Supreme Court and the Federal District Court for the Western District of Washington

• Juris Doctorate, Seattle University, Tacoma, Washington

• Visiting student at Cambridge University for International Law, Administrative Law and European Economic Community Law

• Master of Public Health, University of Michigan

• Bachelor of Business Administration, University of Windsor

• Bachelor of Science, University of Toronto



Our Corporate Commercial Practice


Engaging International Clientele with Customized Legal SolutionsCorporate Commercial Deal List (1)

Advising a global private equity firm, on the proposed takeover of the PRC subsidiaries from a Hong Kong listed company as part of the restructuring for the purchase price of US$296.8 million

Advising CTF Jewellery Group (1929.HK), regarding its main board listing application and provided strategic financial and legal advice to ensure its successful listing on the main board of Hong Kong Stock Exchange

Advising a manufacturer specializing in premium metal coating and printing services based in Hong Kong on the

sale of its two PRC subsidiaries to CPMC Holdings Limited (00906.HK) at a

consideration of HK$125 million

Advising Evergrande Group (3333.HK) regarding the company’s pre-listing legal matters concerning rounds of

strategic investments

*The deal list is not exhaustive and includes transactions completed before joining Yang Chan & Jamison.

14Presentation title© 2019 Yang Chan & Jamison. All rights reserved.

Advising a PRC-incorporated chemical manufacturingcompany on the proposed disposal of its PRC operationsto an American life science and high technology companylisted in NASDAQ

Advising one of the largest general trading companies inJapan and a Fortune 500 company, on the purchase of49% of the total issued share capital of a subsidiary of aListed company of the Main Board on HKEx, with businessfocus in the car dealership in the PRC, for a purchaseprice of US$12.9 million

Advising one of the world’s leading manufacturers of keyproducts for unit load handling system and listed on theSwiss Stock Exchange, on the acquisition of a US Groupand its subsidiaries in Hong Kong and the PRC for thepurchase price of US$25 million

Corporate Commercial Deal List (2)Engaging International Clientele with Customized Legal Solutions

Advising one of the world’s leading providers of onlinecorporate communication services and listed on theFrankfurt Stock Exchange on the acquisition of a HongKong-based premier retail operator and its subsidiaries inHong Kong, PRC, BVI, Taiwan and Singapore for thepurchase price of US$60 million

*The deal list is not exhaustive and includes transactions completed before joining Yang Chan & Jamison.


Joyce Lee, Q.C.PartnerDeloitte Legal Canada LLP

Phone:604-640-3092Email: [email protected]

Joyce Lee is a Partner of Deloitte Legal Canada LLP. She has practised tax and corporate/commerciallaw for over twenty years. Her practice involves tax advice and tax planning, including privatecorporate tax planning, personal and estate tax planning, domestic and offshore trust planning,advising clients on tax audits, objections and voluntary disclosures, advising charitable organizationsand foundations, and negotiations with Canada Revenue Agency regarding tax disputes. The specialfocus of her practice is on Asia Pacific clients and related tax matters. She regularly advises clients oninbound investments to Canada.

Joyce graduated from the University of Manitoba with a Bachelor of Laws degree in 1995. Shespecializes in tax, trust and real estate structuring. She publishes and presents on tax topics regularly.

Membership/Community Involvement

Joyce is active in the business and legal community. She is a member and past chair of the PlannedGift Committee of the British Columbia’s Children’s Hospital Foundation and a past director of the Hong-Kong Canada Business Association. She is the editor of STEP Inside, a publication of the Society ofTrusts and Estate Practitioners. She is a member of the Advisory Board of the Centre for Asian LegalStudies of Peter A. Allard School of Law (University of British Columbia).

Speaker

mailto:Email:[email protected]

Deloitte Legal Canada LLPReal Estate Taxes in British ColumbiaJoyce Lee, Q.C., PartnerJanuary 16, 2020

17

Real Estate Taxes in British Columbia© Deloitte Legal Canada LLP 17

• Speculation and Vacancy Tax (British Columbia)

• Empty Homes Tax (City of Vancouver)

• Foreign Buyer Tax (British Columbia)

• New disclosure rules under the Land Owner Transparency Act (British Columbia), Business Corporations Act (British Columbia) and Business Corporations Act (Canada)

Contents


Speculation and Vacancy Tax

19



• Speculation and Vacancy Tax (SVT) – British Columbia provincial tax

• Purpose: discourage speculation and people from leaving homes vacant

• SVT is different from Empty Homes Tax (City of Vancouver) (EHT)

• Over 99% of British Columbians are expected to be exempt from SVT

20


• For 2018 (first year SVT was payable), SVT was 0.5% of a property’s assessed value for all taxpayers.

• For 2019, the SVT rates are as follows:• 0.5% for BC residents and other Canadian citizens or permanent residents who are not “untaxed

worldwide earners”; and• 2% for “untaxed worldwide earners”

• An individual is an “untaxed worldwide earner” if the total of the individual and the spouse’s unreported income for the year is greater than the reported income of such individual and the spouse


21


• Residential property held through corporations, partnerships or trusts may be eligible for the 0.5% SVT rate if all corporate interest holders (25% or more of the votes or value shares directly or indirectly), partnership interest holders and beneficiaries are Canadian citizens and permanent residents who are not UWEs

• A corporation without any corporate interest holder is subject to SVT at 2%


22


• SVT applies to residential properties in the Metro Vancouver Regional District (not including Bowen Island, Lion’s Bay, and electoral area A, but including the University of British Columbia and the university endowment lands);

• the Capital Regional District (not including the Gulf Islands or Juan de Fuca);

• Kelowna and West Kelowna;

• Abbotsford, Chilliwack, and Mission; and

• Nanaimo-Lantzville.


23


• There are two main exemptions from SVT:

• the principal residence exemption; and

• the tenanted property exemption


24


• A principal residence must be:

• owned by an adult BC resident on December 31, and

• the resident must have resided in the property during the calendar year for a longer period than in any other place, calculated strictly on the number of days of occupancy.

• Property owned by a trust may also qualify, provided that all beneficiaries are BC residents.


25


• For tenanted property exemption, the property must be rented for periods of not less than 6 months from 2019 onward.


26


• Owners qualify for the exemption if:

• they rent to arm’s-length tenants who make the property their “home” (undefined) under a written tenancy agreement;

• they are not UWEs and rent to non-arm’s-length tenants who have the right to occupy the property, provided that the tenants reside in the property longer than in any other place during the relevant month; or

• they are UWEs who rent to a non-arm’s-length tenant, and the tenant earns income that is equal or greater than 3 times the annual FMV rent for the entire residential property.


27


Speculation and Vacancy TaxOther Exemptions

• Construction of new home or substantial renovation

• Property acquired within the year

• Residential care facility

• Medical absence from principal residence

• Spousal separation

• Spousal separation for work exemption

• Spousal separation for medical reasons

28


Speculation and Vacancy TaxOther Exemptions:

• Hazardous or damaged property

• Principal residence for residents departing BC

• Bankruptcy

• Exemption upon death

• Vacant land exemption (2018 only)

• Exemption for land under development

29


• Annual declaration opens on January 20, 2020 for 2019

• Deadline to complete declaration: March 31, 2020

• Payment due date: July 2, 2020

• Complete declaration online or over the phone

• Where multiple owners on title, each owner needs to file a declaration



Empty Homes Tax (City of Vancouver)

31


Empty Homes Tax

• Empty Homes Tax, also known as Vacancy Tax

• City of Vancouver Bylaw No. 11674

• Purpose – to return empty or under-utilized properties to use as long-term rental homes and relieve pressure on Vancouver’s rental housing market

• First tax year began on January 1, 2017

• Raised almost $40 million since inception

• Revenues to be reinvested in affordable housing

32


• For 2020 declare by February 4, 2020, pay by April 16, 2020

• 1% of the property’s assessed taxable value in 2019

• One declaration for each property

• Empty Homes Tax applies to Class 1 Residential properties

Empty Homes Tax

33


• Tax not payable if owner resides at property as principal residence

• “Principal residence” is the usual place where an individual lives, makes his home and conducts his daily affairs including paying bills, receiving mail and is generally the residential address used on income tax returns, driver’s licences, vehicle registration, utility

• A person may only have one principal residence

Empty Homes Tax

34


Empty Homes Tax

• Residential property is considered unoccupied if it is not the principal residence of the “occupier”

• “occupier” is a registered owner or a person who occupies residential property with the permission of the registered owner, but is not a tenant

• Residential property is not occupied for residential purposes by an arm’s length tenant under a tenancy agreement for a term of at least 30 consecutive days

• Residential property is considered vacant property if it has been unoccupied for more than 6 months during the vacancy period (i.e. the prior year)

35


Empty Homes Tax

• Exemptions from payment of tax for:• Owner in care• Transfer of property• Death of registered owner• Rental restriction• Redevelopment or major renovations

36


Empty Homes Tax

• Collector of taxes may require a registered owner to provide information for a period of up to two years after the vacancy reference period


Property Transfer Tax/Foreign Buyers’ Tax

38


Property Transfer Tax

• Property transfer tax (PTT) is generally payable when there is a change in the registered title of property.

39



• Property Transfer Tax rates:

• 1% on the first $200,000

• 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000;

• 3% on the portion of the fair market value greater than $2,000,000; and

• a further 2% on the portion of the fair market value greater than $3,000,000 for residential property (effective February 21, 2018).

40



• Effective September 17, 2018, the Information Collection Regulation requires individuals with a significant interest in a corporation or trust that acquires property to be identified on the property transfer tax return.

• Entities holding properties on behalf of partnerships must also be disclosed.

• Now PTT return collects information on bare trust, citizenship, date of birth and whether property is used as principal residence.

41


Property Transfer TaxForeign Buyer’s Tax

• In addition to regular PTT, foreign entities and taxable trustees must pay an additional foreign buyer’s tax (FBT) on certain residential property transfers.

• Starting February 21, 2018, the FBT rate increased from 15% to 20%.

42



• Foreign entities include foreign nationals and foreign corporations.

• Individuals are foreign nationals if they are not Canadian citizens or permanent residents.

43



• A foreign corporation is either a corporation incorporated outside Canada or a Canadian corporation controlled by a foreign national or a corporation incorporated outside Canada

• Control includes both de facto and de jure control

44



• There is a taxable trustee when:

• the trustee is a foreign entity; or

• the trustee is not a foreign entity but, immediately after registration, a foreign entity has a beneficial interest in the residential property.

45



• FBT applies to the value of residential properties in:

• the Metro Vancouver Regional District,

• the Capital Regional District,

• the Regional District of Central Okanagan,

• the Fraser Valley Regional District, and

• the Regional District of Nanaimo.

46



• Consider:

• Canadian citizen husband and foreign wife (not a Canadian citizen or permanent resident) hold title to their principal residence as joint tenants.

• Husband dies. Wife becomes sole owner on title by survivorship.

• Wife needs to pay FBT.

47



• Consider FBT in estate planning transactions, including transfers into joint tenancy, transfers to trusts and corporate reorganizations.

• Changes in trustees may also give rise to FBT even if the beneficiaries do not change.

48


Property Transfer TaxGAAR

• Prior to the 2018 B.C. provincial budget, the PTT GAAR only applied to the FBT.

• The B.C. Government passed a bill in March 2018 to extend the definition of the term “tax benefit” to apply to a reduction, avoidance or deferral of tax payable “under the Act”

• Section 2.001 of the PTT Act

49



• PTT GAAR does not contain the misuse or abuse test that is contained in the general anti-avoidance rule in section 245 of the Income Tax Act.

• The only conditions that must be satisfied in order for the PTT GAAR to apply are:

• that there must be a transaction or a series of transactions giving rise to a tax benefit and that the transactions or series of transactions must constitute an “avoidance transaction”

50



• Even without the PTT GAAR, beneficial transfers could have been taxed.

• Subsection 2(5) provides that a transferee must file a return at the Land Title Office to register a taxable transaction and pay tax accordingly within a prescribed period.

• Subsection 2(7) provides that no tax is payable under ss.2(5) if no period to file the return and pay the tax has been prescribed.

51



• Consider whether PTT GAAR will apply:

1. Principal residence is transferred into joint tenancy with a bare trustee corporation

2. Principal residence is transferred into joint tenancy with adult child as bare trustee until parent dies

3. Principal residence is transferred by husband and wife into a joint spousal trust; intermediary step is used to transfer principal residence into adult child’s name to avoid PTT


New Disclosure Rules

53


Land Owner Transparency Act

• 2018 BC Budget announced that the province will track beneficial ownership of land in BC

• Purpose: end anonymous land ownership in BC

• May 16, 2019, Bill 23 Land Owner Transparency Act (LOTA) received Royal Assent

• Brought into force by regulations

54



• Current land title system in BC only shows registered owner

• Beneficial owner’s information is not disclosed

• Bare trust agreements frequently used to document private arrangements of who beneficial owner is

• Property Transfer Tax is only payable if there is a change in registered owner (subject to exemptions)

55



• New Registry (first such registry in Canada) will be created to make beneficial owners’ information available to the public

• Target fraud, money laundering and tax evasion

• Canada Revenue Agency will have access to information and may use it for tax evasion

• New Registry will be administered by Land Title and Survey Authority of BC

• New Registry expected to be in operation in 2020

• Basic information available for public search after 90 days of filing – opportunity to request information to be excluded

56



• Upon application to register an interest in land, a transferee must file a transparency declaration, which discloses whether the transferee is a “reporting body”

• Reporting bodies:

• A relevant corporation – companies other than excluded entities such as public companies, insurance companies and strata corporations

• A trustee of a relevant trust – trustees including express trust and bare trusts, but excluding charitable trusts, alter ego trusts, joint spousal trusts etc.

• A partner of a relevant partnership – partners, including under general partnerships, limited partnerships, LLPs

57



• If transferee is a “reporting body”, the transferee must also file a “transparency report”

• Transparency report will include information about the reporting body and individual “interest holder”

• Information includes date of birth, address, social insurance number of each interest holder

58



• Disclosure

• On any application to register an interest in land

• Any time there is a change in interest holder (report within 2 months)

• Existing land owners also need to disclose within a prescribed time

59



• Transparency report requires disclosure of information relating to interest holders

• Corporate interest holders – 10% more of shares or 10% of more of the voting rights, directly or indirectly (reduced from initial 25% threshold)

• Beneficial owners

• Partnership interest holders – an individual who is a partner in a relevant partnership

60



• Information to be disclosed for corporate interest holders

• identification information for company (incorporation number, business, head office)

• identification information for individual who directly or indirectly owns or controls 10% more of shares or qualifies as a “corporate interest holder” including name, citizenship and place of residence

• each corporate interest holder’s date of birth, social insurance number, residency status under the Income Tax Act (Canada)

61



• Information to be disclosed for trustee

• identification information of individual or corporate trustee, beneficial owner and settlor

• date of birth and social insurance number of individual tax number of beneficial owner and settlor

• Reference number of registered trust instrument (if any)

62



• Information to be disclosed for relevant partnerships

• partnership’s business name, type of partnership, registered address and head office address, jurisdiction of organization, business number

• for each individual interest holder, the individual’s name, date of birth, social insurance number, tax number, residence address or

• date on which each individual became or ceased to be an interest holder and nature o the individual’s interest in the reporting body

• the individual’s immigration status

63



• In a conveyance: file Form A Transfer, Property Transfer Tax return and new declaration forms

• Anticipated that Property Transfer Tax will be payable on transfer of beneficial transfer (not currently taxable)

• Additional costs to comply with new requirements

• Existing land owners will also need to comply

64


Business Corporations Act

• In 2017 the Canadian Finance Ministers agreed to change the corporate legislation to require disclosure of beneficial ownership of shares by July 1, 2019

• Prevent corporations from being used for tax evasion and other criminal activities

• Eliminate bearer shares

• Canada Business Corporations Act introduced a beneficial ownership register (in force June 13, 2019)

• On May 17, 2019, the British Columbia Business Corporations Act Amendment Act was passed

• Will be brought into force by regulations

65



• BC private companies must maintain a “transparency register”

• “significant individuals”

• who directly or indirectly own, or indirectly control 25% of more of the issued shares of a company or 25% of voting rights, or

• who are able to exercise rights or influence, directly or indirectly to elect or remove directors

• Transparency register must include information about registered owners, beneficial owners and owners who have indirect control

66



• Transparency register must include the following information about every significant individual:

• Full name, date of birth and last known address

• Whether individual is a Canadian citizen or permanent resident of Canada

• If not, country of citizenship

• Whether individual is a tax resident of Canada

• Date when individual became or ceased to be a significant individual in the company

• Description of how individual is a significant individual

67



• Following can inspect transparency register:

• Police force in BC

• RCMP

• Tax authority of BC

• British Columbia Securities Commission

• BC Financial Services Authority

• Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

• Law Society of British Columbia

68



• Disclosure requirements do not apply to public corporations and extra-provincial companies among other exceptions


Questions?

70


Joyce Lee, Q.C.李翠思

PartnerDeloitte Legal Canada LLP

Office phone: 604-640-3092Email：[email protected]


Deloitte Legal Canada LLP is an independent national law firm with offices across Canada and is affiliated with Deloitte LLP, a Canadian limited liability partnership that is amember firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a United Kingdom private company limited by guarantee. Deloitte Legal Canada LLP, Deloitte LLP, DTTL and eachmember firm of DTTL are legally separate and independent entities.

© 2020 Deloitte Legal Canada LLP.


Tax & Legal Implications



The implementation of tax planning requires specific action / steps to be taken

Certain tax compliance (US tax compliance in particular) may require legal steps to be implemented

At YCJ, legal professionals (with qualifications in Hong Kong, China, U.S. and Canada) help clients to implement tax planning concepts, correct non-compliance problems



Example: US tax residents living, working in China. Both husband, wife and children are U.S. greencard holders. Husband(Mr Z) has developed business operations in China, formed company with nominal capital 10 years ago, such that today Chinacompany’s value today exceeds US$500 million, with husband’s 11% share of China company (ChinaCo) worth US$55million.

Tax planning Concept: wife to give up U.S. greencard, husband to form special purpose vehicle (SPV) to own the 11%,make gift of SPV shares to extent of US tax exemption amount, to wife who is now a NRA (non-resident alien) for US taxpurposes, Wife to form trust, sale of ChinaCo shares will not be subject to US tax; Husband to form CRUT (CharitableRemainder Unit Trust) to hold balance of 11% of shares in ChinaCo.



Tax PlanningConcept Item

Implementation Steps By

Mr Z’s wife to renounce Green Card status

• Surrender of Green Card to U.S. Consulate in China • YCJ lawyers

Mr Z to form Special Purpose Vehicle (SPV)

• Formation of BVI company • YCJ lawyers• In house ComSec

Mr. Z to transfer ChinaCoshares to SPV

• Prepare company resolutions• Prepare transfer instruments• Submit documents to BVI

• YCJ lawyers• In house ComSec



Tax PlanningConcept Item


Mr Z to make gifts of SPV shares to wife

• Obtain valuation report• Prepare company resolutions• Prepare transfer instruments• Submit documents to BVI• Prepare gift tax returns

• YCJ lawyers• In house ComSec• YCJ US Manager

Mr Z’s wife to establish trust • Drafting of trust documents• Appointment of trustee, through YCJ assistance

• YCJ lawyers• Trust company

Mr. Z to establish CRUT (charitable remainder unit trust)

• Draft CRUT trust documents• Calculate CRUT distributions• Form U.S. holding company (LLC) to hold assets for

CRUT

• YCJ lawyers• In house ComSec• YCJ US tax manager /

CPA



Example: US tax residents who has failed to file certain international tax forms: foreign corporations (Form 5471,3520, etc)

Tax Compliance implementation:• Entry into US “streamlined offshore program” for correction of non-compliance



Tax ComplianceItem


Entry to U.S. “streamlined offshore program” for non-compliance in reporting of foreign bank accounts, foreign companies

• Evaluation of qualification for entry into U.S. “streamlined offshore program”

• Preparation of “non-willful” statement for client, in support of entry into “streamlined program”

• Preparation of amended U.S. tax compliance documents (tax returns, FBARs, etc

• Discussion of client’s case with IRS under protection of “attorney client privilege

• YCJ lawyers, qualified in the U.S.

• YCJ tax manager / CPA

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