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Terms and definitions for the speculation and vacancy tax

Last updated on July 10, 2024

The following terms are commonly used for the speculation and vacancy tax:

The definitions provided are only for the purposes of the speculation and vacancy tax.

Applicable period

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 one or more of the following specific exemptions applies such as:

  • Lived in the home before going into residential care, in some cases
  • Could not live in the residence because of heritage conservation work
  • Could not live in the residence because of construction or renovation work
  • Could not 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)

Arm’s length tenant

An arm's length tenant is a tenant who has no special advantage of any personal or family relationship to an owner. 

See tenancy requirements for a detailed definition of arm’s length tenant.

Beneficial owner

A beneficial owner is an individual who has a right to receive benefit from a residential property that is owned by a trustee on behalf of a trust. This right is known as "beneficial interest".

A trust includes an estate.

Beneficial ownership 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.

Business number

The business number (BN) is a 9-digit number the Canada Revenue Agency assigns to businesses and other organizations for tax related purposes. 

Commuter spouse

Generally, spouses can only claim one property as their principal residence together. However, in some cases spouses can be considered to have separate principal residences for 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.

Work reasons

If an individual lives in a separate residence from their spouse because one of them works or carries on business in a particular location, they may each be considered to have a separate principal residence if one of the following applies:

  • 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

Examples

  • Two spouses own a pair of houses. 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 the workplace. Each property may be considered the principal residence of the spouse living there.
  • One spouse lives in a home in Vancouver as their principal residence while another lives in another home in Victoria near the Victoria workplace. Each property may be considered the principal residence of the spouse living there. 

Health reasons

If an individual lives in a home away from their spouse so they can manage an ongoing medical condition, they may each be considered to have separate principal residences. 

To qualify:

  • A medical practitioner must complete FIN 572, Separate Residence Medical Certification (PDF, 210KB) to certify that one individual has a health condition, the ongoing maintenance of which requires them to live apart from their spouse  
  • The medical certificate must be filed with the declaration related to the home of the spouse with the health condition

Example

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 Separate Residence Medical Certification to verify the individual has a health condition that requires the spouses to live apart. Each property may be considered the principal residence of the spouses living there.

Conservation

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.”

Corporate interest holder

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.

In almost every case, a corporation will have at least one corporate interest holder. Corporations without corporate interest holders are very rare, and are charged at the highest rate of tax.

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

Note: A person acting in their capacity as receiver in a receivership is not considered a corporate interest holder. 

For more details about who is considered a corporate interest holder, see section 3 of the Speculation and Vacancy Tax Act.

Eligible individual

Eligible individual is a term used when declaring for residential properties owned on behalf of a business partnership or trust, or owned by a corporation.

In these cases, the eligible individual is the one who is actually living in the property as their principal residence.

These conditions must be met:

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If the owner holds the property as a partner in a partnership

An eligible individual must be one of the partnership interest holders, and all of the partnership interest holders must be:

  • a Canadian citizen or permanent resident of Canada
  • a resident of British Columbia for income tax purposes, and
  • not an untaxed worldwide earner
 

If the owner holds the property as trustee of a trust

An eligible individual must be one of the beneficial owners, and all of the beneficial owners must be:

  • a Canadian citizen or permanent resident of Canada
  • a resident of British Columbia for income tax purposes, and
  • not an untaxed worldwide earner
 

If the owner is a corporation (and neither of the above apply)

An eligible individual must be one of the corporate interest holders, and all of the corporate interest holders must be:

  • a Canadian citizen or permanent resident of Canada
  • a resident of British Columbia for income tax purposes, and
  • not an untaxed worldwide earner

Foreign owner

A foreign owner is a person who isn't a Canadian citizen or permanent resident of Canada.

Heritage property

For purposes of the speculation and vacancy tax, a heritage property must be:

Medical practitioner

This term includes only those who are: 

  • Registered with the College of Physicians and Surgeons of British Columbia
  • Entitled under the Health Professions Act to practice medicine and use the title "medical practitioner"

For the purposes of the speculation and vacancy tax, it also includes those with similar licences in other jurisdictions. 

Non-arm's length tenant

A non-arm's length tenant is a tenant who deals at special advantage, such as a personal or family relationship to an owner. 

See tenancy requirements for a detailed definition of non-arm’s length tenant.

Owner

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 for 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.

This includes:

  • 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

Partnership interest holder

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.

Principal residence

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 separate principal residences and must designate only one principal residence between them, except under certain defined circumstances.

Provincial nominee

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

Reported total income

See Untaxed worldwide earner for a detailed definition of reported total income. 

Resident of B.C. for income tax purposes

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

Residential development means a development of five or more residences on one or more residential properties.

Satellite family

The term "satellite family" is sometimes used for untaxed worldwide earners, when one spouse lives in Canada with little income, and another spouse lives overseas where they make most of their income.

Spouse

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:

  1. Legally marry them
  2. Live in a marriage-like relationship for 12 months
  3. Live in a marriage-like relationship and have a child together (by birth or adoption)
  4. 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
  5. 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

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 2024 for the 2023 speculation and vacancy tax year, use income earned in 2022.

Unreported income

See untaxed worldwide earner for a detailed definition of unreported income.

Untaxed worldwide earner

An untaxed worldwide earner is an individual whose unreported income in Canada is greater than their reported total income in Canada. 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

Your reported total income is based on whether you filed a Canada Revenue Agency (CRA) Income Tax and Benefit Return for the year before the speculation and vacancy tax year.

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If you filed a CRA income tax return for the year

Your reported total income is the income you reported on your CRA income tax return for the year before the speculation and vacancy tax year.

  • If the CRA assessed your tax return, your reported total income is line 15000* of the notice of assessment you received from the CRA
  • If the CRA has not assessed your income tax return, your reported total income is 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.

If the amount is negative, treat your reported total income as zero.

*Before 2019, line 15000 was line 150 of the tax return.

 

If you did not file a CRA income tax return for the year

If you did not file a CRA income tax return, your reported total income depends on which of the following conditions you fall under:

  • If you were required by the CRA to file a return but did not file one, your reported total income is zero. In this case, you would almost always be an untaxed worldwide earner
  • If you are a Canadian resident and did not file a return because you were not required to by the CRA (for example, if your annual income is very low), treat the amount you would have filed as your reported total income. In this case, use the amount you would have included on line 15000* if you had filed a return
  • If you are not a Canadian resident and did not file a return, your reported total income is zero

If the amount is negative, treat your reported total income as zero.

*Before 2019, line 15000 was line 150 of the tax return.

Unreported income

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

Example

In the following example, both spouses are considered untaxed worldwide earners:

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, 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. 

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