Submission Deadline Extended to September 19, but Changes to Reporting Obligations Coming September 17
The date for submitting comments with regard to the proposed Land Owner Transparency Act, as discussed in our previous Client Alert dated August 2, 2018, has now been extended to September 19, 2018.
However, it appears that the provincial government is charging ahead in its aim to require stringent reporting of beneficial and indirect ownership interests by proclaiming the Information Collection Regulation (the “Regulation”) which expands the reporting obligations under the Property Transfer Tax Act, and which will come into force on September 17, 2018.
The Regulation will require a purchaser or transferee of land pursuant to a “taxable transaction” to make “every reasonable effort to ascertain and report all beneficial or indirect ownership interests in that acquisition. This reporting obligation, as currently written, requires drilling down into the structure of corporate shareholders and participants, on multiple levels, as well as the investigation and disclosure of trusts, trust interests, partnerships and partnership holdings. Arguably, as written, it includes all minority shareholders or interest holders, and all participants under both formal and informal trust arrangements at all levels of the ownership structure.
As the obligation to make “every reasonable effort” with regard to disclosing the ownership structure of all “relevant corporations” and “relevant trusts” is mandatory, it is to be expected that a penalty for non-compliance will be announced at some future date.
While the disclosure effort will often be relatively minor in the case of simple transactions, clients should be aware that in transactions involving more complex structures, development projects, partnerships, joint ventures and the like, the process of requesting and gathering the required level of information may take a substantial period of time.
Purchasers seeking to complete sophisticated or complicated transactions should contact their legal advisors prior to agreeing to a closing date to enquire whether the proposed closing deadline would be practical or feasible in light of the new Regulation.