BC Foreign Buyers Tax being challenged in the Courts

The B.C. government is facing a class-action lawsuit over its controversial tax on foreign home buyers.If the lawsuit is certified by the court and succeeds, the province could be forced to repay millions of dollars. Jing Li, a 29-year-old university student from China who lives in Burnaby, is leading the suit. She moved to Canada in 2013 to complete a master’s degree in public administration at the University of Saskatchewan. After completing her degree, she moved to Burnaby but never became a permanent resident of Canada.
On July 13, Li signed a contract to buy property in Langley for $587,895, according to the court documents. Li was required to pay a non-refundable deposit of $55,990 on July 20, just before the tax came into effect in August. She now argues that because of the tax she has to pay an additional $83,850 because of her lack of permanent residency or Canadian citizenship.The suit claims many other foreign buyers entered into contracts to purchase homes before the tax was announced or came into force, but their transactions did not close until after Aug. 2.Her lawyer, Luciana Brasil, argues the additional tax discriminates against foreign buyers because of their status as foreign nationals. She acknowledged there are likely many others who are also grappling with how to handle the problems created by the new tax, but who have not yet come forward and taken the steps that her client has.“The beauty of a class action is that people out there who are similarly situated as my client will benefit from this,” she said, noting her client was willing to “bear the flag for the whole class.”“She’s glad that we’re doing something about it and she’s happy about that,” she said, adding that she hoped the public would refrain from jumping to conclusions “without any facts or understanding” about her client’s situation and the controversial tax.Brasil also says it goes against more than 30 international treaties whereby Canada is committed to treat foreign nationals just as favourably as citizens of this country, including the North American Free Trade Agreement. China is among the 30 countries the lawsuit listed in having international treaties violated by the provincial tax. Other territories and countries include Hong Kong, the Philippines, United States, Mexico, Poland and Russia.Brasil said that under NAFTA Article 1139, ownership of real estate or other property is an investment that is protected by the treaty.Brasil said the lawsuit it seeks to overturn the legislation and demands repayment of any tax added to the purchase price of a home because of the buyer’s nationality.The civil suit filed Monday also claims that only the federal government has the exclusive power over the conduct and regulation of foreign trade.“The legislature of British Columbia cannot enact legislation that is properly within the constitutional authority of the government of Canada, especially those in connection with the foreign affairs, aliens, international trade, and trade and commerce,” states the lawsuit.It claims the tax was enacted without proper constitutional authority and is beyond the legal authority of the provincial government.When asked for comment, the Ministry of Finance issued an email statement that said it could not speak directly to the notice of claim “as it is currently before the court,” noting only that it would “file a response in due course.”The statement did, however, briefly address the suit’s claims that the B.C. government did not have the power to enact such a tax.“Generally, however, all legislation goes through constitutional and legislative analysis, and our view is the changes build on tax policy that has been in place for almost 30 years,” the statement reads. “The Constitution allows provinces to impose taxes within the province to raise revenue for provincial purposes.“British Columbia acted to protect the residential real estate market from distortions.”A judge must decide if the class action application can proceed and Brasil says it could take six months to a year to set a hearing date for the lawsuit.Lawyer Arnon Dachner, who specializes in real estate, isn’t surprised there’s already a suit filed on the foreign home buyers tax, and said it’s possible there will be others who come “out of the woodwork” with other suits.“New laws are always open to challenge and tax laws are no different,” he told Postmedia.“I think it’s important for each person that is potentially subject to this (foreign home buyers tax) to look at their own circumstances and how those might fit inside or outside of the law, to determine whether they might have a claim.”Comments from Kelly Johnston - Keep in mind that this tax does not effect Foreign Buyers who purchase properties in Chilliwack, BC