British Columbians “give” thousands of cars to “friends” in tax dodge
Rules for private sales of cars are being tightened to close a tax loophole.
Last year there were “hundreds of high-end late model vehicles, including BMWs, Porsches and Mercedes, that were reported as so-called gifts from so-called friends.”
Photograph by: Lyle Stafford , timescolonist.com (May 2012)
You like the looks of this fancy Porsche 911 I am driving, which has a book value of $80,400?
You find the 400-watt stereo, the all-leather interior and the 18-way power seat adjustments appealing?
You’re quite correct. As the young people say, it is one dope ride.
And if I can make a friend happy, then I must do so.
I give it to you. It’s yours. Drive it away.
The above scenario plays out every day in front of the officials who handle the process of transferring vehicle ownership.
Judging by the paper trail, British Columbians are among the most generous, altruistic people on earth.
A remarkable number are seized with the urge to give their cars away to “friends.”
It would give most people a nice warm feeling, to know they live in a province where magnanimous gestures like this occur every day.
But not the tax collectors. Those cold-hearted skeptics reject the notion that B.C. is a place where people donate their cars out of the goodness of their hearts.
It must be awful to be a tax collector. Always looking the gift Mustang in the mouth.
But of course, sad to say, they’re dead right.
It’s a scam that costs taxpayers an estimated $17 million last year. Since the bogus gifting requires the connivance of both parties, enforcement is difficult.
But the wide-open loophole will soon be eliminated when the new-old provincial sales tax returns.
The loophole is simply that if you designate the private transfer of a vehicle as a “gift,” you avoid paying taxes. The use of that dodge has become rampant.
Finance Minister Kevin Falcon said the new version of the PST currently before the legislature will allow for a regulation that will close the loophole.
“This is to deal with a very substantial problem associated with people that, to avoid paying tax, were claiming that an item was provided as a gift rather than purchased.”
He said last year there were “hundreds of high-end late model vehicles, including BMWs, Porsches and Mercedes, that were reported as so-called gifts from so-called friends.”
Almost one-third (161,000) of the 503,000 private vehicle transactions last year were reported as gifts instead of sales. And an estimated 60,000 of those were between unrelated individuals. The recipient is listed on the form as “friend.” Sometimes: “Best friend.”
Falcon said sardonically: “Happily, though it hasn’t happened to me yet, there are individuals that are gifting high-end Porsches, Mercedes and BMWs to people that they are unrelated to, out of the goodness of their heart.”
Government tax bulletins have been plaintively warning about this fraud for a while. But the urgency has been stepped up. A background note from the finance ministry says curtly: “This type of tax avoidance is nothing more than theft from British Columbians and it ends now.”
It’s striking how many of them are late-model high-end “gifts.”
The ministry said there are more than 300 instances last year where BMWs were gifted to friends. One of them was worth $70,000.
More than 200 late-model Mercedes were given away, including one worth $60,000. One of them didn’t even go to a friend. The recipient was listed as an “acquaintance.”
Thirty Porsches were gifted, including the $80,400 one described above.
But it will all soon come to an end. There will be provision for real gifts, where cars are donated to charity or given to family members, as long as the donor has paid the original sales tax.
There’ll be more rules to follow when you give a car to a friend. Under one proposal, the friend will be required to pay tax when the gift car is registered.
The exact tax being avoided is the 12 per cent Tax on Designated Property, created in 2010 during the HST changeover. It was invented to even the field between private vehicles sellers and dealerships.
People were dodging the seven per cent PST previously. When the 12 per cent Tax on Designated Property came in, the scam accelerated.
“Give until it hurts,” they say. The explosion of selfless generosity is expected to end soon. Then the hurt resumes.
” If you are without fault, cast the first stone “.
( There would be a huge lineup of BC Citizens waiting with rocks…..)
Gov’ts who rape pillage steal corrupt everyday….but will now come down on people who see and exploit a loophole.
Why do many people accept that twisted logic “WE” owe the Gov’t ?
These people worry about $17 Million, yet seem to have no problem pissing the same amount or more into a number of ill-advised ventures, insiders deals giveaways, etc etc.