Policy Forum: Taxing Non-Residents' Residences--A Critical View of the Laws Behind the New Realty Taxes in British Columbia and Ontario

Years of rapidly escalating home prices in British Columbia and Ontario have spurred governments in each province to introduce unique housing-related taxes, including British Columbia's foreign buyer tax, Ontario's non-resident speculation tax, and Vancouver's vacancy tax (also known as the empty homes tax). The central goals of these taxes are to encourage greater rental stock and to restrain market demand generally by imposing hefty tax burdens on foreign ownership. British Columbia's recent provincial budget continued this trend by, among other things, expanding the foreign buyer tax and introducing a speculation tax. This article presents a critical analysis of the statutes and bylaws governing these taxes. These pieces of legislation have attracted little attention relative to larger political and economic issues associated with each new regime, even though they are central to the operation of each tax. They have presented a considerable challenge to tax practitioners, who have generally had to encounter them with no guiding case law, commentary, or legislative precedents. The authors describe the legal nature and framework of each tax, review core concepts, and identify various interpretive issues. They also consider the administration of each tax, primarily on the basis of their practical experience. The authors conclude that certain legislative and administrative components of each tax demonstrate an overall intention by the enacting governments to prioritize a quick, as opposed to a comprehensive, implementation process. This suggests a desire to achieve immediate policy objectives through the imposition of the taxes, even if the legislation essentially remains a work in progress. This is consistent with the view that, since no clear success metrics have been offered, these new regimes will be part of our tax landscape for the long term, no matter how rental rates or home values might fare.