March 25th, 2020
The Lawyer's Daily
B.C.’s real estate speculation tax fought in human rights tribunal, courts
By Ian Burns
(March 18, 2020, 9:04 AM EDT) — British Columbia introduced its real estate speculation and vacancy tax in 2018 to great fanfare, but now it is facing fights on two fronts as it faces challenges before the courts and the provincial human rights tribunal.
The tax was brought in as a means of cooling B.C.’s hot real estate market, which has left buying a home an unattainable goal for many in the province. It is designed to ensure foreign owners and those with primarily foreign income contribute fairly to B.C.’s tax system. Every registered owner of a residential property in a number of regions is required to tell the government whether they pay taxes in Canada and declare how their property has been used. If the home is deemed not to be the person’s principal residence, it is subject to a two per cent tax on its assessed value. The tax applies to foreign owners and members of so-called “satellite families,” which refers to someone whose income taxed outside of Canada is greater than what they report in Canada,
But Victoria resident Melany Startek is pursuing a case before the B.C. Human Rights Tribunal, saying the tax is discriminatory because it penalizes her due to her marital status. Startek, a Canadian citizen and B.C. resident, is a homemaker whose husband works in the United States and pays his income tax there. Under the law, an individual’s income is combined with their spouse’s income for the purposes of calculating the tax, so therefore Startek is considered to be part of a satellite family and faces a $13,250 tax bill for 2019.
Kailin Che of Early Sullivan, who is representing Startek, said her client lives at home in B.C. full time with her family, pays her taxes and would ordinarily be exempt from the tax but for the fact she has a non-resident spouse who makes more income than she does.
“Not only have you made her a satellite of her husband it has reduced her autonomy as an individual, and it also demeans her in the sense that it doesn’t attribute any value to the work she does at home — why aren’t we valuing the jobs of mothers?” she said.
Che said the so-called satellite families are “distinctly singled out because they are deprived of the benefit of the principal resident exemption, even if that home is in fact their principal residence.” She added the provincial government has made statements which could have the effect of exposing such families to hate or contempt, which would be prohibited by the B.C. Human Rights Code.
“If you look at comments on public forums, it is clear people truly believe that satellite families deserve to be punished because the government is saying they don’t pay their fair share of taxes and are domestic speculators,” she said. “Not only is that discriminatory, it is misleading because it makes people think satellite families are tax evaders and responsible for the housing crisis in the province. And that is not true, she is not a tax evader and is paying her fair share of taxes even though she is a homemaker.”
The concept of a “satellite family” has a disproportionate effect on women and it perpetuates a historical disadvantage in that women have traditionally made less money than men, said Che.
“They have traditionally worked less than men because of their roles as wives and mothers, and so if you discriminate against Canadians who have non-resident spouses that make more money than them then that creates an adverse effect on women which perpetuates disadvantage and is contrary to equality rights under the Charter, which also tie in closely with principles of the Human Rights Code,” she said.
A spokesperson for the B.C. Ministry of Finance said the government “takes human rights very seriously.”
“That is why we re-established the Human Rights Commission to help fight inequality and discrimination in our province,” the spokesperson said. “Out of respect to the process of the B.C. Human Rights Tribunal, it would be inappropriate to comment on the specifics relating to this case.”
In addition to the human rights complaint, Che is also involved in a constitutional challenge against the tax, having appeared in court earlier in March to obtain an injunction to pause collection of tax payments while the justice system deals with the claim. She noted the constitutional challenge is based on equality and discrimination grounds.
“What they are saying is that if you live here you have to work here and file your taxes here, but that neglects the fact people file their taxes where they work,” she said. “Where people file their taxes can be connected to where they live, but it can also be closely connected to where they work — so if you have a provision that punishes me for not filing taxes in B.C., then you are restricting mobility rights. And, as I mentioned, the tax discriminates against Canadians who are married to non-resident spouses who make more income abroad.”
The injunction has not yet been granted. The Ministry of Finance spokesperson said it would be inappropriate to comment on the specifics of the challenge as it was before the courts.