Recent cases address application of BC foreign buyers tax

The BC Court of Appeal and the BC Supreme Court have issued two recent judgments regarding the application of the additional property transfer tax (“ATT”), commonly called the BC foreign buyers tax, imposed under the Property Transfer Tax Act, RSBC 1996, c 378 (the “PTTA”).

In British Columbia v. 1084204 B.C. Ltd., 2025 BCCA 110, the Court found that property transfer taxes, including the ATT, are payable by the person to whom legal title is transferred, even if that person is acting as an agent.

In Chuang v. British Columbia, 2024 BCSC 2422, the Court found that, where a transfer of property is subject to ATT due to a recipient of the transfer being a “taxable trustee”, the fair market value (“FMV”) of the entire property is used to calculate the ATT payable on the transfer, regardless of whether the property is beneficially owned by multiple owners (including Canadian citizens or permanent residents).

The PTTA and the ATT

The PTTA imposes property transfer taxes on “taxable transactions” registered in BC. The term “taxable transaction” is broadly defined and includes a transaction resulting in the transfer of land by way of sale, grant, foreclosure, or court order to a “transferee” (defined as the recipient of the transferred land).

Section 2.02 of the PTTA imposes the ATT where a taxable transaction meets three criteria: first, the taxable transaction pertains to property located in Metro Vancouver, Fraser Valley, and the regional districts of Nanaimo, Central Okanagan, and Vancouver Island; second, the property is “residential property” as defined in the PTTA; and third, any transferee of a taxable transaction is a “foreign entity”, a “taxable trustee”, or both.

The term “foreign entity” means a “foreign national” (meaning a person that is not a Canadian citizen or permanent resident) or a “foreign corporation” (which includes, among others, a corporation not incorporated in Canada, or a corporation incorporated in Canada that is owned or controlled by a foreign national and is not listed on a Canadian stock exchange).

A “taxable trustee” means either of the following: first, a person who acts as a trustee of a trust in respect of which any trustee is a foreign entity; second, a person who acts as a trustee of a trust in respect of which a foreign beneficiary holds a beneficial interest.

British Columbia v. 1084204 B.C. Ltd.

In 1084204 B.C. Ltd, a BC numbered company controlled by a foreign national purchased residential property on Vancouver Island. While title to the property was registered in the company’s name, and the company paid the standard property transfer tax on the sale, it declared that no ATT was payable since the purchase was conducted by the company as a trustee or agent for the foreign shareholder’s spouse, who was a permanent resident of Canada.

The BC Court of Appeal confirmed that, subject to statutory exemptions, property transfer taxes imposed under the PTTA, including ATT, are payable by the person to whom legal title of a property is transferred (i.e. the transferee), regardless of whether another person has beneficial ownership in the transferred property or whether the sale was conducted by an agent.

As a result, the combined receipt of legal title by the company and its status as a foreign entity ultimately triggered ATT liability, and the permanent resident spouse’s interest in the property did not shield the company from being considered the true transferee of the taxable transaction.

Chuang v. British Columbia

In Chuang, two individuals, Ms. Hsia, a Canadian citizen, and Mr. Chuang, a foreign national (collectively, the “Owners”), purchased residential property in Richmond, BC. When registering the transfer, they declared that Ms. Hsia owned 95% of the property and that Mr. Chuang owned 5%. However, when financing their purchase, Ms. Hsia had paid 60% of the purchase price and Mr. Chuang had paid the remaining 40%.

The pair declared a small amount of ATT payable on their taxable transaction because of Mr. Chuang’s 5% registered ownership in the property.

The Owners were assessed for unpaid ATT on the entire FMV of the property. The assessment was based on the position that Ms. Hsia was a taxable trustee holding a portion of her interest in the property in trust for Mr. Chuang (a foreign entity) and that Mr. Chuang’s beneficial interest in the property was greater than 5%.

The Owners argued that Ms. Hsia was not a taxable trustee and that, even if she was, the Owners could only be liable for ATT on the portion of the property Ms. Hsia held in trust for Mr. Chuang (rather than its entire FMV).

The Court rejected both arguments. First, Ms. Hsia was a taxable trustee under the PTTA due to the Owners creating a “resulting trust” through their financing of the property. Under trust law, because Mr. Chuang had advanced 40% of the funds used to purchase the property but only registered a 5% ownership interest, the law presumed that Ms. Hsia held the remaining portion of Mr. Chuang’s ownership in trust, thus making her a taxable trustee under the PTTA.

Second, the entire FMV of the property was subject to the ATT. The Court confirmed that, contrary to the Owners’ argument, because each of the Owners was a foreign entity (Mr. Chuang) or a taxable trustee (Ms. Hsia), s. 2.02(5)(a) of the PTTA was applicable, making the entire FMV of the property subject to ATT.

Key takeaways

In light of these decisions, any acquisition of a legal interest in a home in BC, including by an agent or trustee, requires a robust ATT analysis whenever foreign entities are involved. Further, careful consideration should be given to the nature of the relationships between potential owners and their means of financing the property where foreign nationals are concerned, since these details could affect whether a purchaser may be considered a taxable trustee in respect of another owner, potentially rendering the entire FMV of the transferred property subject to the ATT.