New Yorker article on Vancouver housing prices

[casper]

Originally Posted by WarrenC12

A tax loophole for sure, but legal. Although to be fair they are paying GST, Luxury car tax and everything else locally.

Is that the case even when it is one half of a married couple?

I don't even think it is a tax loophole? The person who made the money would have been taxed in their "home country" where the money was earned. Perhaps that rate is lower or higher than Canada.

When a tourist comes to visit Vancouver and bring in spending money, pays for hotels etc. we are happy because that is money coming into the economy.

This is a no different that permanent tourist They have money coming from somewhere else that they are spending here. I think this is positive for the economy even if they use some tax dollars.

That said, this can't be a big part of the economy.

[cornholio]

Originally Posted by casper

I don't think this is actually illegal. If you live in Canada and have income from outside the country you have to declare it. If you have a relative outside the country that gives you money you don't and you certainty don't have to declare your relatives income. You only have to pay income tax if you actually live in Canada.

a)if you accept more than $10,000 dollars to Canada regardless if it's a gift you must report it
b)if you accept money over a period of time to Canada that equals to more than $10,000 you must report it (e.x. $3,000 per month over 6 months) http://www.iatatravelcentre.com/CA-C...ns-details.htm
c)you must prove to the cra that they are bona fide "gifts" not a transfer of wealth, and you must prove the original source as well. The onus is on the receiver. Otherwise it is not a gift.
e)if you live in canada more than 182 days you must report all your global "family" income and pay income tax (subject to various tax treaties) http://www.fin.gc.ca/treaties-conven...force--eng.asp
f)if you don't live in Canada for a minimum of 2 years (730days) out of a 5 year period (1825days) then you lose your permanent residency. as of this month Canada started to track exists from Canada, finally, but surprise surprise they have not overly advertised this so that they can snag some cheats in a couple years time. (will be fun, just watch ;-) )
http://www.cic.gc.ca/english/newcomers/about-pr.asp
http://beyondtheborderobserver.org/2...s-off-june-30/

etc.

enjoy...:-)

[cornholio]

Originally Posted by jlousa

Even if we play the hypothetical game and say they only spend $40K/yr and pay $3K in sales taxes, I'm sure the "investor class" people we're talking about would be several times that amount. That miniscule number still generates significant money to the government, the $40K spent creates a couple hundred thousand in economic spinoff due to the multiplier effect.
If we removed even 5000K investor class people from the lower mainland the effect to the local economy would be very pronounced, and not in a good way.
I don't have a solution and agree that some reworking needs to occur, but getting rid of it isn't the answer.

I think the single worst thing for a economy is apathy, having people who are a integral part of that economy lose confidence in it because the market is not "fair". If you slave your ass off for 20 years to buy a nice house and some asshole comes in from the outside and outbids you, and then uses public services without contributing enough taxes for what they pay, so you have to cover it. Thats when "you" can just stop giving a fuck, and when there are many people in your shoes then the apathy spreads like a disease and the economy suffers, significantly. Its why high income inequality destroys and stagnates economies in the long run.

So yes, I strongly disagree with you

[whatnext]

Originally Posted by Alex Mackinnon

If it's not a widespread problem in Vancouver how do you explain widespread asset inflation, yet pathetic GDP numbers in BC? Some of it is access to cheap credit, but I don't think that is driving the crazy cost of living in Vancouver.

Also, what's wrong with coming up with "thumbsuck" numbers? $3,000 per year is roughly $30K-40K in pre-tax spending per year. A reasonable amount for a single affluent person. Not everything is taxed, and some things only have GST.

It is a structural inequality problem that needs addressing. No, it's not illegal, but is probably immoral to exploit. At the very least, people ought to be annoyed when loop holes negatively affect them. Competitiveness of people living and working here is reduced when dead money drives up living expenses, but does little to propel the greater economy.

This is a web forum, not a government review panel. A bit of room for hypotheticals is definitely reasonable.

A solution would be to impose taxes on assets if the reported income doesn't match up to the local amount of assets. Basically, a trumped up property tax in lieu of income tax when there isn't a reasonable local income. Have a $2M house and no local income? Pay a tax equal to what someone who could afford a $2M house would pay in income tax.

Too true, but as you see some will post themselves blue in the face rather than admit its a problem. It must be some sort of perverse form of white man's guilt for previous generations' sins.

How much land in the City of Vancouver is tied up, empty, by absent or very part-time owners? And yet the same crowd who generally goes on and on about how we must build up because land is so scarce will turn around an defend those creating zombie neighbourhoods.

The respected US housing blog Housingwire put it bluntly:

This is what happens when foreign investors invade Vancouver
Now the most expensive housing market in North America

"...Vancouver isn’t an obvious superstar. It’s not home to a major industry—as New York and London are to finance, or San Francisco to tech—and it doesn’t have the cultural cachet of Paris or Milan. Instead, Vancouver’s appeal consists of comfort and security, making it what Andy Yan calls a “hedge city.” “What hedge cities offer is social and political stability, and, in the case of Vancouver, it also offers long-term protection against climate change,” he said. “There are now rich people around the world who are looking for places where they can park some of their cash and feel safe about it.” A recent paper by two Oxford economists bears this out, showing a tight correlation between London house prices and turmoil in southern and Eastern Europe. The real-estate boom in Miami has been magnified by political unrest in Venezuela. And Vancouver, which has a large Chinese population, easy access to the Pacific Rim, and nice weather, has become a magnet for Chinese investors looking for insurance against uncertainty..."

[Nites]

Wealthy Chinese business man from Hong Kong

1. Gets on plane to Vancouver
2. Leaves YVR in a limo with a real estate agent preferably (Manyee Lui)
3. Heads to Shaughnessy, Arbutus Ridge, and Point Grey areas of Vancouver
4. Buys 3-4 houses VIA outbidding other buyers
5. Heads back into limo
6. Arrives at the airport and back to Hong Kong

[WarrenC12]

Originally Posted by whatnext

How much land in the City of Vancouver is tied up, empty, by absent or very part-time owners? And yet the same crowd who generally goes on and on about how we must build up because land is so scarce will turn around an defend those creating zombie neighbourhoods.

This tired argument again? If somebody wants to pay $2.5M and then leave a house empty while they pay tens of thousands in property tax, let them.

You've already been exposed as a west-side NIMBY, aren't you happy with your increases property value?

The "crowd" around here that I laugh at is one that is all about freedoms, until they perceive something to impact them negatively, and then they are all about government regulation and heavy-handed crackdowns.

[Alex Mackinnon]

Originally Posted by casper

I don't even think it is a tax loophole? The person who made the money would have been taxed in their "home country" where the money was earned. Perhaps that rate is lower or higher than Canada.

When a tourist comes to visit Vancouver and bring in spending money, pays for hotels etc. we are happy because that is money coming into the economy.

This is a no different that permanent tourist They have money coming from somewhere else that they are spending here. I think this is positive for the economy even if they use some tax dollars.

That said, this can't be a big part of the economy.

Tourists don't get free healthcare or greatly subsidized education.

[casper]

Originally Posted by Alex Mackinnon

Tourists don't get free healthcare or greatly subsidized education.

If somoene lives outside the country (for the required length of time to not pay Canadian tax) makes money and sends it to relatives in Canada to spend in Canada I don't think that is a bad deal for Canada. Quite the opposite.

So the money is spent in the local economy by relatives who do not pay much in Tax and benefit from free healthcare and subsidized education. Is that a particularly bad deal for Canada? I do not think so.

Compare this to some of the local Canadian parallel situations:
- Dad (or Mom) moves from Newfoundland to work in Alberta and sends money back to their spouse to put food on the table and look after the kids.
- Foreign worker (lets say from Mexico) comes to Canada to work on an BC Apple farm send money back to his spouse in Mexico to feed the kids.
- Dad (or Mom) moves back to Hong Kong to work and send money back to their spouse in Vancouver to put food on the table and BMW in the garage for the kids to take to school.

In all three cases it is the local economy where the family lives that benefits the most. It also helps keep the local BMW sales staff employed.

[theKB]

Originally Posted by casper

If somoene lives outside the country (for the required length of time to not pay Canadian tax) makes money and sends it to relatives in Canada to spend in Canada I don't think that is a bad deal for Canada. Quite the opposite.

So the money is spent in the local economy by relatives who do not pay much in Tax and benefit from free healthcare and subsidized education. Is that a particularly bad deal for Canada? I do not think so.

Compare this to some of the local Canadian parallel situations:
- Dad (or Mom) moves from Newfoundland to work in Alberta and sends money back to their spouse to put food on the table and look after the kids.
- Foreign worker (lets say from Mexico) comes to Canada to work on an BC Apple farm send money back to his spouse in Mexico to feed the kids.
- Dad (or Mom) moves back to Hong Kong to work and send money back to their spouse in Vancouver to put food on the table and BMW in the garage for the kids to take to school.

In all three cases it is the local economy where the family lives that benefits the most. It also helps keep the local BMW sales staff employed.

in those first two cases the worker is paying income tax (maybe not the apple picker) plus the benefit of the taxes associated with consumption where as say you put the person who drops 7000 on property tax for their 2 million assessed home and lets be generous spend 100k a year so about 10000 in consumption taxes. Outside of the BMW salesman the average retail sales person is not cashing in mega dollars. Your guy who heads to alberta to work in the oil fields lets be conservative and say he makes 6 grand a month. With employer contributions taken into consideration that worker accounts for $25000 in payments to one form or another of the public purse from salary alone. Plus you can then factor in the consumption spending from himself and the family on top of that.

Obviously there are a lot of factors to consider when calculating the worth of an individual residing in canada but one has to consider the fact that someone who produces something and consumes vs. consumption alone that the producer is more valuable to our economy.

[Alex Mackinnon]

Which begs the question, why on Earth are we supporting regressive taxing of people with over $800,000 in assets?

Having consumption alone doesn't add that much to the local economy. Most of the crap they'd be consuming comes from overseas or Ontario anyways. There's almost no local manufacturing and probably will never be thanks to high living costs and things like the HST.

Also, consider that propping up the local luxury car retailing industry isn't exactly preforming a great service to humanity. The level of consumerism practiced by some people isn't something to celebrate. In fact it's rather disgusting.

[cornholio]

Originally Posted by WarrenC12

This tired argument again? If somebody wants to pay $2.5M and then leave a house empty while they pay tens of thousands in property tax, let them.

You've already been exposed as a west-side NIMBY, aren't you happy with your increases property value?

The "crowd" around here that I laugh at is one that is all about freedoms, until they perceive something to impact them negatively, and then they are all about government regulation and heavy-handed crackdowns.

Freedom to do heavy handed crackdowns on non citizens and citizens circumnavigating tax laws.

Property taxes on a $2.5 million dollar home don't even cover a fraction of the cost to society. Property taxes represent a miniscule portion of the tax base. Someone who buys a house here and pays property taxes but pays no income taxes while using public services is going to be a net drain, a parasite. And this goes beyond the fact that it creates a unfair market and feeds apathy towards the economy.

Regardless the crackdowns are coming in to play, slowly. It just does not get lots of publicity. I am not a conservative fan but I do approve of their hilariously effective plans that they have in the works. Watch and see. There will be probably 10,000 of thousands of people in for a rude awakening in a couple years time once the required data is collected, which will be used retroactively. i.e. lost citizenships/residency permits and seizures by the cra, etc.

[cornholio]

Originally Posted by casper

If somoene lives outside the country (for the required length of time to not pay Canadian tax) makes money and sends it to relatives in Canada to spend in Canada I don't think that is a bad deal for Canada. Quite the opposite.

So the money is spent in the local economy by relatives who do not pay much in Tax and benefit from free healthcare and subsidized education. Is that a particularly bad deal for Canada? I do not think so.

Compare this to some of the local Canadian parallel situations:
- Dad (or Mom) moves from Newfoundland to work in Alberta and sends money back to their spouse to put food on the table and look after the kids.
- Foreign worker (lets say from Mexico) comes to Canada to work on an BC Apple farm send money back to his spouse in Mexico to feed the kids.
- Dad (or Mom) moves back to Hong Kong to work and send money back to their spouse in Vancouver to put food on the table and BMW in the garage for the kids to take to school.

In all three cases it is the local economy where the family lives that benefits the most. It also helps keep the local BMW sales staff employed.

I disagree. Not only is this not legal but it is damaging to the economy by making the local markets unfair. Nothing worse than the people who matter losing confidence in the local markets because they are unfair. The people who matter are the people who work, locally, and make the province a better place. Money coming in like this is a transfer of wealth and should be taxed, we are not talking about ona fide gifts here. If its taxed fine, you can play with the tax rates to ensure that the markets remain fair and everyone contributes their required share.

[casper]

Originally Posted by cornholio

I disagree. Not only is this not legal but it is damaging to the economy by making the local markets unfair. Nothing worse than the people who matter losing confidence in the local markets because they are unfair. The people who matter are the people who work, locally, and make the province a better place. Money coming in like this is a transfer of wealth and should be taxed, we are not talking about ona fide gifts here. If its taxed fine, you can play with the tax rates to ensure that the markets remain fair and everyone contributes their required share.

This Global and Mail shows that Income Tax in Hong Kong is around 1/2 to 1/3 of what it is in Canada.

http://www.theglobeandmail.com/repor...ticle13393877/

Canada has a system where Income is taxed not when it is given away.

[Vin]

Originally Posted by Alex Mackinnon

Tourists don't get free healthcare or greatly subsidized education.

Yeah but the tourist spendings pale in comparison to the amounts spent by immigrants on overpriced homes and other assets to benefit businesses and other home owners who sell locally. Those overpriced homes require high taxes in the thousands per month to keep them humming, which benefit the municipalities tremendously, thus giving you better transit systems, etc. Each household property levy alone is way more tax money collected by the government than that contributed by many local louts who don't really want to work and think that the world should revolve around them. If everyone here can contribute to the building of our economy, then hey, this country won't need those rich immigrant's money in order not to lose out globally. I think that should be the focus.

To please the naysayers, I believe that the Feds should still require wealthy immigrants to declare a capped amount of foreign earnings to be eligible for having dependents use 'free services' here, although I still feel that many of them have contributed their fair share, if not more, financially on their decision to move here.