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B.C. tax loopholes turn farming into foreign investing

Not far from my home are the back-country farm roads of suburban Richmond, B.C. For the past several years, a drive down any one of them revealed a bewildering trend – construction of Versailles-like mansions.

There has never seemed to be much taking place on the massive stretches of farmland behind the homes themselves. In the summer, many of the estates have someone hawking baskets of vegetables or fruit, usually blueberries. But that is often the extent of agricultural activity one sees taking place on the hectares and hectares of property these suburban castles encompass.

Who knew that by operating a modest blueberry stand for a few weeks, the homeowner was avoiding paying tens of thousands of dollars a year in taxes.

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Globe investigation: Mega-mansions and speculators on B.C. farmland are exploiting tax breaks

Read more: B.C. considers tax changes for farmland speculators

Read more: B.C. says local council responsible for regulating residential use of farmland

As part of its ongoing probe into real estate practices in British Columbia, The Globe and Mail last weekend unveiled yet another massive scam: Speculators and investors purchasing thousands of hectares of prime B.C. farmland and then reaping huge tax benefits intended to help farmers. All under the nose of a provincial Liberal government that seems to be either utterly clueless or benignly neglectful when it comes to routing out nefarious conduct in the real estate market.

It isn't overstatement to say the Globe has done more in the past year to expose rotten dealings in the real estate business than the government – and its appointed industry overseers – has in the past 10 years.

And what has the latest investigation uncovered? Among other things, people buying up agricultural properties in Metro Vancouver with no intention of farming them. Rather, in some cases, the buyers are erecting mega-mansions that they are turning into boutique hotels for the wealthy.

In order to maintain their farm status and the massive tax benefits it confers, those holding more than a hectare of arable farm land must sell a measly $2,500 worth of product a year. Hence, the modest, month-long blueberry stand found in front of some of these 25,000-square-foot monstrosities.

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A recent report by the regional authority, Metro Vancouver, showed that a full one-quarter of farms in suburban Vancouver meets only this minimum production requirement. What a disgraceful waste of some of the best growing soil in the country that is.

The same study indicated there are more non-farmers in the Agricultural Land Reserve than there are farmers. And what is the primary benefit of being in the reserve? Again, enormous tax breaks, ones originally put in place to help farmers, but that are now assisting, among others, speculators and wealthy foreign investors from mainland China.

While fertile soil becomes increasingly valuable and precious in many parts of our ever-crowded world, it's treated as frivolous commodity in British Columbia.

Once again, the provincial government is being cast in an extremely unfavourable light. And, once again, the public is rightly furious it has been played as fools, dutifully paying its fair share of taxes while others con their way around them. The impression this leaves is that the government is more interested in helping real estate agents and foreign investors than safeguarding valuable farm land. And that notion is not at all far-fetched.

The Globe spoke this weekend to Richard Bullock, the former head of the Agricultural Land Reserve, who said the reason he was fired from the job last year by the provincial government was because he rejected all of the applications by developers and others to get land removed from the ALR.

Given the complete free-for-all taking place around farmland today, it's not surprising Mr. Bullock might have been canned for those reasons.

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With its inability to protect the public interest exposed once again, the B.C. government will have to take some action in response to the Globe inquiry. The most obvious move is to insist that only agricultural land holders earning significant income from crop development are eligible for the generous tax concessions now being enjoyed by people who are farmers in name only.

The government also needs to do something to shut down the hotels that are being developed inside these monster homes and impose heavy fines for those who ignore the rules. It needs to put restrictions on the amount of farmland a foreign investor can own as well as applying the 15 per cent foreign buyers' tax to farmland – something it stupidly exempted when it first brought the levy in.

Finally, the government needs to instantly close loopholes that allow buyers to use numbered companies and bare trusts to avoid paying property transfer taxes on agricultural land – something it promised it would look into doing on all real estate transactions but so far has done nothing about.

Mostly, the B.C. government needs to get its act together before the rage being stoked by the goings-on in the Metro Vancouver real estate industry becomes widespread, deeply rooted and something that threatens the social fabric of the region.

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About the Author
National affairs columnist

Gary Mason began his journalism career in British Columbia in 1981, working as a summer intern for Canadian Press. More

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