Practice National Taxation

Tax obligations for foreign home buyers In Canada: Bakhtiari v British Columbia

Can a refugee avoid paying the foreign buyer’s tax on human rights grounds under the Canadian Constitution? David J Rotfleisch comments on the Bakhtiari case

Author: David J. Rotfleisch

Editor's Note: The ruling in this case received media coverage. If you want to read more, we recommend this article in Canadian Lawyer and this article from CTV. 

Introduction: Restrictions on Foreign Home Buyers Via Taxes

David Rotfleisch, CPA, JD
David J Rotfleisch, CPA, JD is the founding tax lawyer of and Rotfleisch & Samulovitch P.C., a Toronto-based boutique tax law corporate law firm.

Canada has had the reputation of being welcoming towards immigrants at least for the past decades. However, there has also been a series of federal and provincial tax policies implemented in an attempt to restrict foreign non-resident of Canada home buyers from purchasing Canadian real properties. Effective as of January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act prevents many non-Canadians from buying residential property in Canada for 2 years. Anyone who knowingly assists a foreign home buyer to violate the Prohibition on the Purchase of Residential Property by Non-Canadians Act, and/or the foreign home buyer who is in violation of the Act, will have to pay a fine of up to $10,000 per transaction. A court can also order the sale of the residential property or void the transaction.

If a foreign buyer is qualified to purchase residential properties in Canada, he or she must check to see if there are additional tax obligations for foreign home buyers. Often, additional provincial taxes apply, separate from the current federal restrictions on foreign home buyers. For instance, in British Columbia, the first province to impose additional taxes on foreign home buyers, the British Columbia provincial government has been imposing a 20% Property Transfer Tax on non-resident buyers since August 2016.

Ontario, another popular destination for newcomers, started with a 15 per cent Non-Resident Speculation Tax (NRST) in 2017 and eventually increased the tax rate to 25 per cent in 2023. The NRST was also originally limited to purchases or acquisition of residential property located in the Greater Golden Horseshoe Region by foreign individuals and entities. In 2022, the NRST became applicable provincewide.

Bakhtiari v British Columbia (Minister of Finance), 2023 BCSC 1260

On July 24, 2023, the British Columbia Supreme Court ("BCSC") issued a ruling against Mr. Bakhtiari, upholding the lower court decision that the home buyer must pay a $1.32 million "foreign national" tax on a $6.6-million house in West Vancouver. Mr. Bakhtiari came to Canada from Iran as a refugee in 1995. He was granted permission to stay and has lived in British Columbia since his arrival in 1995. Mr. Bakhtiari did not obtain Canadian permanent residence until February 16, 2022, after nearly 25 years of struggle with the Canadian immigration system, partially due to the protracted administrative processes and "a morass of administrative delay."

Mr. Bakhtiari is the sole shareholder of his corporation, Technocorp Venture Capital Inc. On January 12, 2017, Mr. Bakhtiari applied for Canadian permanent residence. With the idea that his residence application would ultimately be approved, on June 14, 2019, Technocorp acquired a residential property with Mr. Bakhtiari being the beneficial owner of the property. In July 2021, British Columbia assessed Mr. Bakhtiari and imposed $1.32 million Additional Property Transfer Tax (also colloquially known as the Foreign Buyer Tax). It was levied at a rate of 20% of the purchase price.

Mr. Bakhtiari disputed the liability to pay the Foreign Buyer Tax on constitutional grounds, arguing that the imposition of the Foreign Buyer Tax on him violates his rights under sections 7 and 15 of the Canadian Charter of Rights and Freedom ("Charter"). Specifically, Mr. Bakhtiari's rights under section 7 to liberty and security of the person and his rights under section 15 to equality under the law without discrimination were violated. Alternatively, the federal government was grossly negligent delaying Mr. Bakhtiari's application for legal status as a permanent resident. Mr. Bakhtiari further claimed that he was effectively a "stateless" person as an accepted refugee in Canada.

British Columbia applied to strike the claims, alleging that Mr. Bakhtiari was attempting to advance an economic interest not protected by section 7 of the Charter. The Attorney General of Canada, representing the federal government, took no position on the application to strike.

The British Columbia Supreme Court upheld the decision in Li v British Columbia, 2021 BCCA 256, and cited other cases to support the legal proposition that "immigration status is not an analogous ground" of discrimination under section 15 of the Charter. The court recognized that the Foreign Buyer Tax "attaches an economic consequence — a tax — to an economic act, the purchase of a residence." However, the court found that "purely economic rights" are not fundamental personal choices protected under section 7 of the Charter. As a result, Mr. Bakhtiari's claims were struck, and he was held liable for the $1.32 million.

Case Comment: "Discrimination" in Tax Policies

Tax policies are generally designed to primarily collect revenue for the government with various secondary purposes. Historically, Canada has imposed discriminatory tax laws in conjunction with other legislation. For example, the Chinese Head tax and the Chinese Exclusion Act imposed additional tax specifically on Chinese immigrants entering Canada from 1885 to 1923. However, the tax was not primarily introduced to collect revenue but rather designed as a means of controlling Chinese immigration in Canada.

Modern tax policies and legislations are required to be constitutionally valid. Section 15(1) of the Charter stipulates that "every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability." Specifically, section 15 applies to government actions and the actions of government agents carried out under lawful authority, which includes the Canadian Revenue Agency ("CRA").

However, as shown in Bakhtiari, tax policies concerning economic rights are rarely found to be discriminative, even if only a small group of people are subject to a specific type of tax. In particular, taxes based on immigration status have been regularly held to be constitutionally valid since immigration status is not an analogous ground. Using the Chinese Head tax as an example, it would not be constitutionally valid as it was. But if there is a "head tax" for all immigrants who do not have permanent residence, the tax policy is unlikely to be found discriminative. Under the current Canadian immigration system, immigrants indeed have to pay additional fees in order to obtain admission to Canada, the amount of which depend on their personal immigration status as well as their nationality.

For Mr. Bakhtiari, his situation was rather unfortunate. He has legally and physically resided in Canada for over 25 years at the time the property was purchased. Although he was indeed not a Canadian citizen or permanent resident, his circumstances were beyond his control due to the administrative delays. Yet, the court has repeatedly affirmed that at least in British Columbia, people who are under similar circumstances as Mr. Bakhtiari, are considered less deserving than Canadian citizens and permanent residents.

On the bright side, the federal government and Ontario provincial government have recognized the issue of "actual residence" vs "residence immigration status" in designing tax policies. As a result, the additional prohibition and taxes imposed on foreign home buyers have at least partially excluded those who have spent a significant amount of time living in Canada.

David J Rotfleisch, CPA, JD is the founding tax lawyer of and Rotfleisch & Samulovitch P.C., a Toronto-based boutique tax law corporate law firm and is a Certified Specialist in Taxation Law who has completed the CICA in-depth tax planning course. He appears regularly in print, radio and TV and blogs extensively.  

With over 30 years of experience as both a lawyer and chartered professional accountant, he has helped start-up businesses, cryptocurrency traders, resident and non-resident business owners and corporations with their tax planning, with will and estate planning, voluntary disclosures and tax dispute resolution including tax audit representation and tax litigation. Visit and email David at

Read the original article in full on Mondaq. Author photo courtesy Rotfleisch & Samulovitch P.C. Title image by Arek Socha from Pixabay.

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