Terms & Definitions for the Speculation and Vacancy Tax
The following terms are commonly used for the speculation and vacancy tax:
- Arm’s length tenant
- Beneficial owner
- Commuter spouse
- Corporate interest holder
- Foreign owner
- Non-arm’s length tenant
- Partnership interest holder
- Principal residence
- Provincial Nominee
- Reported income
- Resident of B.C. for income tax purposes
- Satellite family
- Total household income (worldwide income)
- Unreported income
- Untaxed worldwide earner
The definitions provided are only for the purposes of the speculation and vacancy tax.
See tenancy requirements for a detailed definition of arm’s length tenant.
A beneficial owner is an individual who has beneficial or advantageous interest in a residential property that is owned by a trustee on behalf of a trust.
It generally includes the beneficiaries of the trust, particularly when they’re entitled to live in the property or have some other interest in it. It usually doesn’t include the trustee.
Individuals who have particular powers over the trust, and corporate interest holders of some corporations involved in the trust, can sometimes also be included in this category.
For a more detailed definition, see section 2 of the Speculation and Vacancy Tax Act.
If certain conditions are met, each spouse can declare the home they actually live in as their principal residence. If they also own an interest in the other spouse's residence, they may be exempt for that interest under section 35, Additional residential property exempt — certain spouses.
A commuter spouse for work reasons means the individual lives in a separate residence from their spouse because they work or carry on business in a particular location.
To qualify as a commuter spouse for work reasons, one of the following must apply:
- One spouse lives in a home at least 100km closer to work than the other home
- One spouse lives on Vancouver Island and the other doesn’t
In both of the examples below, the spouses qualify as commuter spouses:
Two spouses own a pair of houses, one in Vancouver and one in Kelowna. Spouse A lives and works in Vancouver while Spouse B lives and works in Kelowna. Living in Vancouver allows Spouse A to be 455 km closer to Spouse A’s workplace than if Spouse A were to live in Kelowna where Spouse B lives.
One spouse lives in a home in Vancouver as their principal residence while another lives in another home they own in Victoria as their principal residence because they work in Victoria.
A commuter spouse for health reasons means the individual lives in a home away from the other spouse so they can manage an ongoing medical condition.
To qualify as a commuter spouse for health reasons:
A medical practitioner must certify that an individual has a health condition, and
The owner must certify that the condition prevents the two spouses from living together. More information may be requested upon audit.
Two spouses in Delta live apart when one must move to a home in Vancouver to receive long-term medical treatment. A doctor signs a physician certification form to verify the individual has a health condition and the owner certifies the health condition requires them to live apart. The two may be considered commuter spouses.
A corporate interest holder is a person who has significant influence over a corporation's actions. For example, if a corporation was deciding how to use a residential property, a corporate interest holder would have input into that decision.
Most corporations have a number of corporate interest holders. They may include:
- Major shareholders
- Any other individuals with power, influence or control over the corporation
For the purposes of the speculation and vacancy tax, a corporate interest holder includes a person who meets at least one of the following criteria:
- Has effective control over 25% or more of the equity shares of a corporation
- Has 25% or more of the voting rights
- Can appoint or remove most of the board of directors
- In some other way has significant influence or control
This is true even if the person's control, influence or rights operate indirectly, through an intermediary, or as part of a group of co-operating people.
A foreign owner is a person who isn't a Canadian citizen or permanent resident of Canada.
See tenancy requirements for a detailed definition of non-arm’s length tenant.
An owner is usually a person or corporation whose name is on the official title document for the property. If several names are on title, they are all owners.
Owners include people who are on title to assist with estate planning or mortgage financing reasons.
Sometimes an owner on title has passed their interest to someone else, who is then considered the owner for the purpose of speculation and vacancy tax.
A life tenant registered on title
A holder of the last agreement for sale, if the holder and the agreement are registered on title
A leaseholder, if the lease is registered on title, and the property is assessed in the leaseholder's name
A business partnership is two or more people doing business together to make profits. This doesn’t automatically include spouses or people who co-own a residential property.
A partnership interest holder is generally an individual who owns a property on behalf of a business partnership, and the other partners in that partnership.
If a corporation is a partner, all of that corporation's corporate interest holders are also partnership interest holders.
A principal residence is the place where an individual lives for a longer period in the calendar year than any other place. Spouses cannot claim two different principal residences except under certain defined circumstances.
A Provincial Nominee is an individual who has a valid certificate under the B.C. Provincial Nominee Program.
Reported total income is the income you reported on your Canada Revenue Agency (CRA) Income Tax and Benefit Return for the year before the speculation and vacancy tax year. This will be line 150 of your notice of assessment you received from the CRA. If the CRA has not assessed your income tax return then reported total income will be line 150 of your filed income tax return. Income taxed in another country may still be part of reported total income, and may be included on line 150 of your return or assessment.
No tax return or assessment
If an individual, who is a Canadian resident, has not filed a tax return and was not required to file a tax return, reported total income is the amount they would have put on line 150 if they had filed a return.
If an individual, who is not a Canadian resident, has not filed a tax return their total reported income is zero.
If an individual has not filed a tax return and was required to file a tax return, reported total income is zero.
A person's residency for income tax purposes is the place where that person regularly or normally lives. Use the same guidelines as you did for your federal income tax return for the applicable speculation and vacancy tax year.
The Canada Revenue Agency (CRA) has developed Income Tax Folio S5-F1-C1 to help you in evaluating an individual's residency status. Refer to this for additional information. Tax residency can be a complicated area of law and legal advice is suggested if you have any doubts or unusual circumstances.
A spouse is a cohabiting spouse or common-law partner, as defined in the federal Income Tax Act. "Cohabiting" means you are living together in a marriage-like relationship. A "spouse or common-law partner" means you are either married, or are a "common-law partner" as defined below.
The definition that applies is from the federal Income Tax Act.
Generally, you’re considered common-law partners with someone if you either:
- Live in a marriage-like relationship for 12 months
- Live in a marriage-like relationship and have a child together (by birth or adoption)
- Live in a marriage-like relationship and have a relationship with the other person's child in which all of these are true:
- You have custody of that child (or did until they turned 19)
- You have control of that child (or did until they turned 19)
- The child completely depends on you for support
- Live in a marriage-like relationship and the other person has the kind of relationship with your child described in (c).
If you were common-law partners with someone previously, but then break up, you become common-law partners again immediately once you get back together. The 12-month requirement doesn’t apply in this case.
Total household income is all income earned anywhere in the world by you and your spouse.
For the purposes of the speculation and vacancy tax declaration, use income from the year before the speculation and vacancy tax year.
For example, if you’re declaring in 2020 for the 2019 speculation and vacancy tax year, use income earned in 2018.
Unreported income is the total of all amounts the individual earns or realizes worldwide if the amounts:
- Are earned or realized in the immediately preceding calendar year, and
- Have not been reported in respect of the individual for the purposes of the federal Income Tax Act.
Unreported income includes any amounts realized from the sale or other disposition of property that have not been reported.
Income that is described in section 81 of the federal Income Tax Act doesn’t have to be included as unreported income.
An untaxed worldwide earner, also known as a member of a satellite family, is an individual whose unreported (in Canada) income (income not taxed in Canada) is greater than their reported (in Canada) income (income taxed in Canada). An individual’s income is combined with their spouse’s income for the purposes of this calculation.
The reported and unreported income used are from the year before the speculation and vacancy tax year.
In the following examples, both spouses are considered untaxed worldwide earners or members of a satellite family:
One spouse is Canadian and the other is not. Around 70% of their combined income is earned outside of Canada and isn’t reported on a Canadian income tax return. Because more than 50% of their combined total income is not reported on a Canadian income tax return, they are both considered members of a satellite family.
Two spouses (both Canadian citizens) own a home in B.C. One spouse works out of the country and only files taxes outside Canada. More than 50% of their combined household income is unreported on a Canadian income tax return. Both of these owners are members of a satellite family.
The speculation and vacancy tax has received Royal assent in the Legislature. This information is not a replacement for the law.