CRA nets $240M from probe of real estate tax cheats in B.C., Ont.

The Canada Revenue Agency says it hasrecovered more than $240 million from audits related to probes of tax cheating onreal estate in British Columbiaand Ontario.

According to figures published on the CRA's website, the bulk of the money comes from probes in Ontario, where thefederal department has recovered$210.4 million through more the 13,400 audits conducted between April 2015 and September 2016.

More than 10,900of those Ontario audits are related to theGST/HST New Housing and New Residential Rental Property rebates, and resulted in$143.9 million in recoveries.

Meanwhile, the CRA says it has recovered $30.3 million from 2,366 audits in British Columbia, withmore than half of thatmoney related toGST/HST fraud probes.

• CRA leak about crackdown on B.C. real estate tax cheats heats debate

CRA has also imposed $12.5 million in penalties.In the event ataxpayer knowingly makes a false statement when filing a return, the CRA can apply apenalty equal to 50 per centof the additional tax payable.BetweenApril 2015 toSeptember 2016, the CRA applied 663 penalties, with the biggest one hittingalmost $2.5 million.

Focus on B.C.

In July, CRA confirmed to CBC that it was bulking up its scrutiny ofthe B.C. real estate market, which had been seeing a feverish run-up in house prices in Vancouver.

"These audits focused on the areas where the risk of non-compliance was highest, mainly related to property flips and GST/HST non-compliance," the agency saidback then.

• CRA crackdown on overseas tax cheats reaps more money than expected

"The real estate project was not undertaken to address questions of housing affordability. The CRA does not have any role to play concerning the affordability of real estate ...Transactions in the Greater Toronto Area have been the subject of greater scrutiny for a number of years. More recently, the CRA has been actively monitoring and auditing real estate transactions in British Columbia."

The agency says it doubled its efforts in B.C.in 2015, andstarted a review of 500 "high dollar-value"real estate transactions in B.C. that yearto find any unidentified tax issues.

Despite that increased focus on the B.C. market, Ontario stillaccounts for a disproportionate number of audits when the populations of the two provinces are compared.

The federal revenue minister said the government is aiming to recoupmore moneyin B.C.

"We are making a clear effort in British Columbia and our goal is to recover as much money [as in Ontario], if not more," Diane Lebouthilliertold the Globe and Mail.

According to CRA, it is looking into five areas ofconcern, including:

• Questionable source of funds.
• Property flipping.
• Unreported GST/HSTon the sale of a new or substantially renovated property or on theGST/HST new housing rebate.
• Unreported capital gains.
• Unreportedworldwide income.