Canada’s Supreme Court has declined to hear an appeal by a couple who challenged British Columbia’s decision to impose the province’s 20 per cent foreign buyer tax on the full market value of their jointly purchased property, rather than only the foreign partner’s registered five per cent ownership share.
The case involved a condominium in Richmond, British Columbia, purchased through a pre-sale agreement in 2014 by Canadian citizen Chia Wen Hsia and her foreign fiancé, Li Yuan Chuang.
Although the property was registered with 95 per cent ownership under Hsia’s name and just five per cent under Chuang’s name, tax authorities later found that Chuang had contributed 40 per cent of the purchase price.
The couple initially paid the foreign buyer tax only on the five per cent share registered to the foreign purchaser. However, following a tax audit, provincial authorities determined that the tax was payable on the entire property’s market value.
Couple Cites Chinese Marriage Customs in Tax Dispute
Hsia argued that, under Chinese cultural traditions, a husband’s financial contribution towards purchasing a home for his wife can form part of a marriage-related gift or customary wedding payment.
She maintained that her partner had contributed towards the property according to his financial circumstances, while the larger ownership share had been registered in her name.
The couple argued that imposing the foreign buyer tax on the entire property was unfair because the foreign purchaser legally held only a five per cent registered interest.
However, the tax authorities maintained that the assessment should reflect the actual financial arrangements behind the purchase rather than simply the ownership percentages recorded on the title.
Courts Uphold the Tax Authorities’ Position
The British Columbia Supreme Court rejected the couple’s legal challenge in 2024. They subsequently appealed to the provincial Court of Appeal, which also dismissed their case earlier this year.
The appeal court concluded that the couple could potentially have avoided the full-property tax assessment if ownership had been registered in a way that reflected their actual financial contributions.
The provincial government argued that the legislation was designed to prevent foreign purchasers from avoiding the tax through indirect ownership arrangements.
On Thursday, Canada’s Supreme Court declined to grant the couple permission to appeal, leaving the lower courts’ decisions in place.
More Than $126,000 in Additional Tax at Stake
According to court records, the condominium was originally declared at a purchase price of $474,500.
A tax analyst with British Columbia’s Ministry of Finance estimated that the couple owed more than $126,000 in additional tax.
British Columbia’s foreign buyer tax is set at 20 per cent of the property’s fair market value in designated areas.
The two-bedroom condominium, located in the Avanti Richmond complex in Richmond, has a latest assessed value of approximately $820,000.
The dispute therefore carries significant financial consequences for the couple, as the tax assessment was based on the property’s full value rather than the foreign partner’s registered five per cent share.
Lawyer Criticises the Scope of the Legislation
The couple’s lawyer, Masao Morinaga, declined to comment on the Supreme Court’s decision but indicated that the legal process had reached its final stage.
He criticised the wording of the existing legislation, arguing that it can also capture circumstances in which its application may produce unfair outcomes.
The case highlights the importance of understanding British Columbia’s foreign buyer tax rules before purchasing property with a foreign national, particularly when the registered ownership shares differ from the actual financial contributions made by the buyers.
