The Three Meanings of Resident for Real Estate Transactions

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The Three Meanings of Resident for Real Estate Transactions

Permanent Resident is different from Canada's Income Tax Act resident which is an ITA officer

Summary

Real estate transactions may involve up to three different legal meanings of resident. Canada’s Income Tax Act (“ITA”) deems you as representing an artificial legal person called an ITA “officer”. That federal officer is resident or non-resident in Canada for the ITA since property rights are otherwise under provincial jurisdiction.

You may also be a “permanent resident” or “temporary resident” (“foreign national”) as defined in the Immigration and Refugee Protection Act (Canada). Both are different from the ITA “resident”.

You are also a “resident” of your Province which charges Provincial taxes. In British Columbia (“BC”), this includes the Property Transfer Tax.

Background

Property ownership is under provincial jurisdiction as “a civil right within the province”. That is why land tiles offices are provincial. Vancouver’s real estate prices have been increasing. The BC Government responded by imposing a 15% tax on “foreign national” buyers. Luciana Brasil, lawyer for a class action lawsuit, calls it the “Foreign Nationals’ Property Tax”. There are others who also believe this 15% tax could be illegal. Perhaps some are assuming all three “residents” are the same legal person. They are not.

ITA Resident is the ITA Officer

The Government obfuscates the relationship between the ITA “resident” and the ITA “officer”. For starters, there is no definition of “resident” in the ITA. The closest thing is a listing of the conditions (how and when) that allows s.250 of the ITA to deem you as an ITA “resident”. However, it does not say what the ITA “resident” is. The Government wants you to believe the ITA “resident” is you (who) as a private person while not representing the ITA “officer”. CRA’s T2091 form shows this is false.

CRA’s T2091 form, “DESIGNATION OF A PROPERTY AS A PRINCIPAL RESIDENCE BY AN INDIVIDUAL”, uses the SIN as a “social insurance number” styled all in lower case letters. Apu’s Theory shows such a SIN identifies you as representing an ITA “officer”. It is the ITA “officer” who is resident with a ITA “principal residence” in Canada.

Two Residents in BC Contract of Purchase and Sale

The contract in BC for buying or selling real estate is the “Contract of Purchase and Sale” (“CPS”), or Form BC2057, which says,

SELLER: resident of Canada (or) non-resident of Canada as defined under the Income Tax Act

The above is so that lawyers and realtors are not liable if their client leaves Canada without paying the 25% withholding tax on any sale profits. (This also encourages lawyers to make sellers tick off either box). However, another reason is ticking either box is consenting to be an ITA “officer”.

You are also a “resident” of your Province which charges Provincial taxes. In British Columbia (“BC”), this includes the Property Transfer Tax.

Immigration Definition of Resident

Finally, you may also be a “permanent resident” or “temporary resident” (“foreign national”) as defined in the Immigration and Refugee Protection Act (Canada). Both are different from the ITA “resident”. This mandatory declaration is made on the CREA Individual Identification Information Record form.

GST for ITA Officer fits Apu’s Theory

Canadians do not know they are representing an ITA “officer”.  The federal government does not want this known. Apu’s Theory, Chapter 20 shows the ITA “officer” is the same as the GST “officer”. That is how the federal government charges GST on the sale of new or substantially renovated homes. Without the ITA “officer”, the sale would be only within provincial jurisdiction.

Hiding the ITA Resident aka ITA Officer

The Government goes to great lengths hiding any reference to that officer by deliberately not defining or obfuscating it:

  1. Officer: Use “resident” instead of “officer”, but do not define “resident”. Peter Boyce, a law professor, says, “The office and officer are conceptually divisible but legally indivisible” This means it does not matter whether the officer is resident or non-resident. The office is always in Canada. That means the income belongs to Canada’s ITA office and is not the individual’s private property. That is why Canadians who accept being deemed as ITA officers must report Canada’s office’s income regardless of where in the world it was earned. To avoid talking about you as a deemed ITA “officer”, the Government uses “resident”. The ITA does not define “resident”.
  2. OFFICER: usually styled as your name in UPPER CASE. I do not know any law dictionary or law textbook that discusses this. This conclusion is from circumstantial evidence. See my 18-page paper, “Attorning to Canada’s Income Tax Act Office (or, Why is the Name in ALL CAPS?)”.
  3. Officer: Another way in identifying your ITA officer is using your SIN as a “social insurance number” styled with all lower case letters instead of your SIN as a “Social Insurance Number” styled with upper and lower case letters. The “social insurance number” is not defined in the ITA, the Canada Pension Plan, or the Employment Insurance Act. This is also deliberate, since those three statutes together use the “Social Insurance Number” styled with upper and lower case letters 63 times. Even the BC Real Estate Association got it right: their FINTRAC Consumer Brochure, says on page 2,

You should not provide your Social Insurance card as identification.

Canada’s income tax system (for individuals) is based on entrapment. This obfuscation and hiding is partly why.

No Capital Gains Declaration on Principal Residence

The CPA form forces you declaring your sale while representing an ITA “officer”. CRA’s T2091 and T1 forms all use the “social insurance number” styled all in lower case identifying you as representing the ITA “officer”. As your officer is exempted by the ITA on any capital gains on an ITA “principal residence”, it does not require any reporting.

Conclusion

Canada’s government obfuscates how the ITA really works, including deliberately not defining or identifying the ITA officer.

Canada’s ITA exempts any capital gains on an ITA officer’s “principal residence”. It is an exemption for that federal legal person, the ITA “officer”. That is not the same as respecting your common law right to private property under provincial jurisdiction. It’s just that the end result feels the same. In addition, the federal government can also rescind this exemption at anytime without violating your private person’s common law property rights.

This is not legal advice.

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