Chinese ex-husband's 1% stake in home leads to foreign buyers tax battle

A Richmond woman claims the B.C. government is trying to make her pay 100 per cent of the province's foreign buyers tax because her Chinese ex-husband holds a one per cent interest in the property.

Zi Yang filed a B.C. Supreme Court lawsuit this month in a bid to fight a $237,000 bill for tax the B.C. Ministry of Finance claims is owing on the 2017 purchase of her Richmond home.

Yang is a permanent resident of Canada and claims she "intended and used" the house as her primary residence.

But she claims her mortgage lender forced her to put ex-husband Sixun He on the title as a guarantor. 

According to the court documents, Yang even paid the $2,400 that she calculated should be owing on her husband's one per cent slice of the home, which cost them $1.6 million.

"My husband, Sixun He, is just my guarantor for my mortgage. This house is my major residence. I have a PR card. I have lived in this address since I bought this house," she wrote in a 2018 letter of objection.

"Please redo the calculation."

'Please clarify the situation'

The previous Liberal government introduced the foreign buyers tax in 2016 in the hopes of cooling Vancouver's then-overheated housing market.

The tax initially required foreign nationals to pay an additional 15 per cent on the purchase of residential property in Greater Vancouver.

The NDP increased the amount to 20 per cent in 2018 and expanded its reach to include the Fraser Valley, Capital Regional District, Nanaimo Regional District and the Central Okanagan.

According to correspondence included with the notice of civil claim, the province questioned Yang's financial relationship with her ex-husband.

"Although you are not a foreign national, evidence suggested that you were holding a portion of the property in trust for a foreign national," wrote Finance Ministry auditor Devon de Wynter.

The government asked for copies of bank statements and asked about the origin of a bank draft worth more than $514,000 that was used to close the purchase.

"You identified in a phone conversation with a colleague that some of the payment was made by Sixun and then changed the story to that you had borrowed some of these funds from your sister," de Wynter wrote.

"Please clarify the situation with support for the transactions."

A legal technicality

The house was sold last summer for $1.42 million. The correspondence notes that Yang has since purchased another home in Richmond for $2 million — but with no guarantor.

In her notice of civil claim, Yang says her first language is Mandarin and she has trouble comprehending and communicating in English.

The legal basis of her B.C. Supreme Court claim centres around the Finance Ministry's contention that the letter her accounting firm sent to the auditor disputing the tax didn't meet the criteria to count as a "notice of objection."

According to the claim, the government says the objection had to be mailed within 90 days to an official with the tax appeals and litigation branch.

Yang's lawyer claims that may be "standard practice" but it isn't mandated by law.

"As a lay person and immigrant who has struggled with English as a second language, [Yang] cannot be expected to be familiar with the ministry's administrative practices and cannot be subjected to requirements that are more stringent than those set out in the [Property Transfer Tax Act]," the claim says.

None of the allegations have been proven in court.