Court Dismisses Interim Relief Sought By Homeowners Currently Challenging The Speculation And Vacancy Tax Act

• Published date: 28 May 2020
• Author: Mr Damon Chisholm and Dharam Dhillon
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Tax, Trials & Appeals & Compensation, Construction & Planning, Real Estate, Property Taxes
• Law Firm: McMillan LLP

Background

In November 2018, British Columbia's provincial government introduced the Speculation and Vacancy Tax Act¹ (the "Act"). The goal of the Act is to address housing affordability by discouraging property owners from leaving residential properties vacant in British Columbia's major urban centers. The Act does so through the use of an annual tax (the "Tax") levied against property owners based on occupancy status in designated regions of the province. These regions include municipalities within the Metro Vancouver Regional District (excluding Bowen Island, Lions Bay, and the University Endowment Lands), municipalities within the Capital Regional District (excluding the Salt Spring Island, Juan de Fuca and Southern Gulf Islands), Abbotsford, Mission, Chilliwack, Kelowna, West Kelowna, Nanaimo and Lantzville.

The Tax applies to residential property that remains vacant for over 6 months in a calendar year. The Tax applies to all residential property owners in the taxable regions, including individuals, corporations, trustees, and partners. Currently, if the Tax is payable, it is calculated at a rate of:

• 0.5% for B.C. residents and Canadians citizens or Canadian permanent residents outside B.C. (who are not untaxed worldwide earners); and
• 2% per cent for foreign owners or individuals (or spousal units) who are untaxed worldwide earners.

There are a number of exemptions to the Tax that are available under the Act. One of those exemptions is the principal residence exemption. This exemption applies where the subject property is located in one of the aforementioned designated areas, and is the property owner's principal residence. Corporations, partnerships and trusts are also eligible for the principal residence exemption where their corporate interest holders, partnership interest holders and beneficial owners, respectively, qualify for the exemption as individuals. Other exemptions include construction related exemptions, whereby owners of land under construction are exempt from the Tax if reasonable steps are being taken without undue delay to develop or renovate the subject property. All property owners are required to file an annual declaration even if they qualify for an exemption. Details regarding these exemptions, and other exemptions available, are further described in the Act.

The Tax was designed to turn empty homes into housing for British Columbians, and ensure foreign owners and those with primarily foreign income contribute fairly to...