Welcome in Canada? Victoria businessman battling foreign-homebuyer tax
Credit to Author: Cayley Dobie| Date: Sun, 29 Sep 2019 20:43:26 +0000
VICTORIA — A Victoria businessman, who claims he is being financially bullied by the government, has launched a legal fight over the province’s 20 per cent foreign- homebuyer’s tax.
Eric Chang, who owns the Serious Coffee outlet on the Old Island Highway in View Royal, said he has been unfairly targeted by a tax that was supposed to be aimed at foreign speculators.
“I’m here for immigration. I’m not here to buy and sell houses, make money and run away. I want to immigrate here and raise my kids here,” he said.
But that appears to be in jeopardy as he faces a bill of about $269,000 from the province. It’s money that he does not have and the bill could force him to return to Taiwan.
“It’s so stressful and so frustrating,” said Chang, who has been contacted by collection agents seeking payment on the outstanding debt.
Victoria lawyer Bruce Hallsor, who is representing Chang, said there is unfairness in the case as his client was invited to come to B.C. as part of the provincial nominee program.
“We’ve invited him to be here, to come to this country — the province of B.C. invited him,” he said, noting Chang and his then wife, Sin-chen Su, abided by all the rules by investing in a business and a residence to show their commitment to live and work in the province.
The problem was the first house Chang and his wife bought was in Vancouver. They entered into a contract to buy a pre-sale in the spring of 2016 as they waited to be accepted into the nominee program — Chang was confirmed as a candidate in the fall of 2016 and approved as a nominee in December 2018. His application for permanent residency was received in February this year.
The house they first bought required help from Chang’s sister, Ruby, a Canadian citizen who has lived here for 18 years. The title reflected Ruby’s 98 per cent stake, with Chang and his wife holding one per cent each. They put down a large deposit in April 2016.
But between then and the time the deal closed in September, the then-15 per cent foreign buyer’s tax came into force.
At that point, Chang received advice from a notary public about dealing with the tax, that included he and his wife paying their share based on the equity they would have in the home.
The next year, Chang and his wife were told that, to comply with the nominee program, they would have to buy a home close to their business in the Victoria area.
The first house was sold, proceeds of the sale distributed to the three parties and Chang and his wife bought a home in Colwood, where he lives with his children.
Last spring, the province sent notice that Chang and his wife owed nearly $250,000 in tax as a result of the foreign-tax penalty on the purchase of the first home.
“More than a year later, when he’s living in Colwood he gets a letter saying: ‘You owe us $250,000.’ That would not apply to him as a resident, but they consider him to be a non-resident,” Hallsor said.
“That’s a bit of a complication because he’s certainly living here legally at the behest of the province. You have one branch of the government inviting him and the other is basically saying you’re not welcome here.”
Chang said he doesn’t have the money to pay that bill, and his sister is paying his legal bills via a line of credit.
In a statement, Finance Minister Carole James said, as the case will be before the courts, it would be inappropriate to comment on the specifics, but noted the tax measures were geared to tackle a housing crisis in B.C.’s urban centres.
Chang said if his legal challenge fails, he will have to sell his assets and return to Taiwan. The situation has made him wonder about B.C.’s core values, making him think the country does not value immigration.
“This tax, if he has to pay it, is the end of his business,” Hallsor said. “The only way to pay it is to sell his business or house, and if he does either of those he is violating his agreement [under the nominee program] with the province of B.C.”
Chang is not the only one wondering about B.C.’s values in the wake of property-tax rules.
Oak Bay resident Denise Simpson, who is part of a class-action lawsuit challenging B.C’s speculation and vacancy tax, said she doesn’t like the direction the province has taken.
“It’s very upsetting that they are treating Canadians like this. It’s really disgusting and I feel like B.C. is on the path to socialism if they haven’t already reached it,” she said. “I was proud to be a Canadian until this happened.”
Simpson, 72, and her husband Robert, 93, are joint owners of their Oak Bay property, but they live part of the year in Texas, where Robert draws his pension. That technically makes them a satellite family and means their property is subject to the speculation tax and a $6,000 tax bill.
The tax, designed to reduce the number of empty homes and help deal with B.C.’s shortage of affordable housing, targets properties that are left vacant for months at a time.
The speculation tax rate for 2019 is two per cent for foreign owners and satellite families, and 0.5 per cent for Canadian citizens or permanent residents.
Denise, who has lived in the home since she was five and inherited it 20 years ago, said she isn’t against the tax in theory.
“I agree with it in terms of preventing pure speculators from buying and keeping property empty. But I don’t see anything wrong with foreigners from anywhere being allowed to buy property in Canada,” she said, noting they use the home every year for weeks at a time, sometimes months.
“I do believe if the properties are truly vacant, they should be forced to rent them. I agree with the law in that respect.”
But she pointed out they are not wealthy and are living on pensions, and facing a tax bill like this could mean the prospect of selling or renting the house, which would mean she can’t use it.
She sees the tax measure as government imposing itself on people’s lives.
“It’s taking away people’s freedom — telling them what they can own and not own,” she said. “If I lose this house there is no reason for me to come back to Canada.”