Terms and Definitions for the Speculation and Vacancy Tax
Declaration letters for the 2020 speculation and vacancy tax year will be mailed out soon. Check mailing dates for your area.
The following terms are commonly used for the speculation and vacancy tax:
- Applicable period
- Arm’s length tenant
- Beneficial owner
- Commuter spouse
- Corporate interest holder
- Foreign owner
- Heritage property
- Non-arm’s length tenant
- Partnership interest holder
- Provincial Nominee
- Reported total income
- Resident of B.C. for income tax purposes
- Residential development
- 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.
Some exemptions are available to an owner who is away from their home during the year if the property was their previous principal residence either in the year before their absence or in the year before an "applicable period."
An applicable period, which applies only to the year(s) right before the taxation year, includes a year in which a specific exemption applied such as:
- Lived in the home before going into residential care, in some cases
- Couldn’t live in the residence because of heritage conservation work
- Couldn’t live in the residence because of construction or renovation work
- Couldn’t live in the residence because it’s uninhabitable
- Away from home for medical reasons
- Away from home for any other reason (valid once in 10 years)
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. A trust includes an estate.
It generally includes the beneficiaries of the trust (or estate), particularly when they’re entitled to live in the property or have some other interest in it. It sometimes includes the trustee.
Individuals who have particular powers over the trust, and corporate interest holders of certain corporations, can sometimes also be included in this category.
For a more detailed definition, see section 2 of the Speculation and Vacancy Tax Act.
Generally, spouses can only claim one property as their principal residence together. A commuter spouse, however, is an individual whose principal residence is different from their spouse’s because of work or health reasons.
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, each spouse must have a separate principal residence and one of the following must apply:
- One spouse's home is at least 100km closer to their place of work or business than the other spouse's home is
- 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, each spouse must have a separate principal residence, and:
A medical practitioner must certify that an individual has a health condition, the ongoing maintenance of which requires them to live apart from their spouse (Form 572), and
File the medical certificate owner with the declaration related to the home of the spouse with the health condition
Two spouses own two properties, one in Delta and one in Vancouver. One spouse moves into the property in Vancouver to receive ongoing treatment for a specific health condition. A doctor signs a physician certification form to verify the individual has a health condition that requires them to live apart. The two may be considered commuter spouses.
Conservation of a heritage property has the same meaning as in the Heritage Conservation Act and “includes any activity undertaken to protect, preserve or enhance the heritage value of heritage property.”
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.
Generally, a corporation will have at least one corporate interest holder.
For the purposes of the speculation and vacancy tax, a corporate interest holder includes a person who meets any of the following criteria:
- Has effective ownership and control of:
- shares representing at least 25% of the value of the corporation's equity, or
- at least 25% of the voting rights
- Can appoint or remove most of the corporation's board of directors
- Can exercise significant influence or control over the corporation
A foreign owner is a person who isn't a Canadian citizen or permanent resident of Canada.
For purposes of the speculation and vacancy tax, a heritage property must be:
- Designated heritage property under the Heritage Conservation Act,
- Protected heritage property under the Local Government Act, or
- Protected heritage property under the Vancouver Charter.
See tenancy requirements for a detailed definition of non-arm’s length tenant.
An owner is usually an individual 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.
Special cases of ownership
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 holder of the last agreement for sale, if the holder and the agreement are registered on title
- A life tenant, if the life estate is registered on title
- A leaseholder, if the lease and the leaseholder are 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 and must designate only one principal residence between them, except under certain defined circumstances.
A Provincial Nominee is an individual who has a valid certificate under the B.C. Provincial Nominee Program.
For the year in which an individual becomes a Provincial Nominee, and the following year, they are treated as if they are:
- a Canadian citizen,
- a resident of British Columbia for income tax purposes, and
- not an Untaxed Worldwide Earner
See Untaxed worldwide earner for a detailed definition of reported total income.
A person's residency for income tax purposes is the place where that person regularly or normally lives. For speculation and vacancy tax purposes, use the same guidelines as you did for your federal income tax return in the applicable tax year.
The Canada Revenue Agency (CRA) has developed Income Tax Folio S5-F1-C1 to assist 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.
Residential development means a development of five or more residences on one or more residential properties.
A spouse means a "cohabiting spouse or common-law partner", as defined in the federal Income Tax Act. "Cohabiting" generally means you are living together in a marriage-like relationship.
The rules of the federal Income Tax Act apply here. For your convenience, refer to the following guidance.
When do you become a spouse?
You become a spouse of another person if you either:
- Legally marry them
- 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 (d)
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.
When do you stop being a spouse?
You stop being a spouse of another person if you live separate and apart for 90 days because of a breakdown in your relationship.
Total household income is the combined 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.
See untaxed worldwide earner for a detailed definition of unreported income.
An untaxed worldwide earner, also known as a member of a satellite family, is an individual whose unreported (in Canada) income is greater than their reported (in Canada) total income. 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.
Reported total income
Tax return or assessment
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 15000* of the 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 15000 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 15000 of your return or assessment.
*Before 2019, line 15000 was line 150 of the tax return.
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 included on their tax return for purposes of line 15000* if they had filed a return.
*Before 2019, line 15000 was line 150 of the tax return.
If an individual, who is not a Canadian resident, has not filed a tax return, their reported total 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.
Unreported income is the total of all amounts the individual earns or realizes worldwide in the preceding calendar year that have not been reported to the CRA on their tax return.
This includes any unreported amounts realized from the sale or other disposition of property.
Unreported income does not include:
- Any amount expended to earn or realize an amount
- Income that is described in section 81 of the federal Income Tax Act
In the following example, both spouses are considered untaxed worldwide earners or 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. The other spouse works in British Columbia and files taxes in Canada, but earns a much lower income than the spouse working abroad. Their combined unreported income is greater than their combined reported total income.
For detailed information about determining whether you are an untaxed worldwide earner, otherwise known as a member of a satellite family, see section 5 of the Speculation and Vacancy Tax Act.
This information is provided for your convenience and guidance and is not a replacement for the legislation.