AF2G Investments Inc. v. Minister of Finance – What constitutes a valid property transfer tax objection?

Published by Adrian Zee

A recent decision from the British Columbia Supreme Court (“BCSC”), AF2G Investments Inc. v. Minister of Finance (BC), 2023 BCSC 2133, provided guidance on when a communication constitutes an objection under section 19 of the Property Transfer Tax Act, R.S.B.C, 1996, C. 378 (the “Act”).

At issue was whether a letter dated February 10, 2020 (the “February Letter”) addressed to an auditor at the Ministry of Finance, Property Taxation Branch (the “Branch”) constituted a valid objection.

The Act requires a valid objection to:

  1. be in writing;
  2. be mailed to the Minister of Finance (the “Minister”);
  3. be mailed within 90 days of the notice of assessment; and
  4. contain reasons for the objection and state all relevant facts.

On December 2, 2019, the Branch issued two assessments against AF2G. The February Letter responded to the assessments with detailed arguments as to why the assessments were in error.  AF2G sent a subsequent letter to the Tax Appeals and Litigation Branch (the “TALB”) on March 11, 2020 (the “March Letter”) which referenced the February Letter “objection” and provided further reasons why the assessments should be set aside.

By a standard form letter dated May 1, 2020 (the “Decision”), the TALB rejected the March Letter as an objection because it was not mailed to the TALB within 90 days as required by subsection 19(1) of the Act.

AF2G challenged the Decision in a judicial review application before the B.C. Supreme Court. AF2G argued that the Decision was unreasonable and that the February Letter constituted a valid objection within the 90-day period.

The Court quashed the Decision, holding that it was unreasonable because the appeals officer and director in charge of the Decision articulated conflicting tests for determining what constituted a valid objection. The Court remitted the matter back to the Minister for reconsideration together with directions on how the Minister should determine whether the February Letter is a valid objection.

The Court found the jurisprudence from the income tax context, which establishes a low bar with respect to objections under the Income Tax Act, to be inapplicable in the context of an objection under the Property Transfer Tax Act .  The Court held that if an objecting document is not actually mailed to the Minister in accordance with the specific language of s. 19(1) of the Act, then for it to be found to be a notice of objection there must be something about the communication, including the circumstances surrounding that communication and any related communications, that reasonably leads to the conclusion the objection process is being invoked.

Although AF2G was successful in quashing the Decision, the Court’s guidance for the Minister’s reconsideration favoured many of the Crown’s arguments.  It remains to be seen whether the Minister will ultimately determine that the February Letter was a valid notice of objection.

Taxpayers and their representatives should keep in mind that there may be different requirements for objecting to different types of tax assessments and ensure that they follow the correct procedure set out in the applicable statute. Mailing an objection letter to the wrong address could, in some circumstances, result in the taxpayer losing their right to appeal.