Allegations have been made by companies under the control of wealthy British Columbia real estate mogul Terry Hui against the Canada Revenue Agency (CRA), citing a series of improper actions in pursuing significant tax debts dating back to 2007.
The CRA audit is targeting five entities within Hui’s real estate development conglomerate, including Adex Securities, One West Holdings, a numbered company in British Columbia, and two shell companies based in Luxembourg.
In a recent application to the Federal Court, these companies assert that the government is unjustly attempting to collect nearly $330 million in tax debts, primarily comprised of accumulated interest.
The application highlights the involvement of the group in substantial real estate ventures in Toronto, Vancouver, and Calgary, with the audit, commencing in 2013, focusing on transactions leveraging Canada’s tax treaty with Luxembourg.
As per the court documents, the CRA initiated its audit of the companies in 2013. (Robert Short/CBC)
The companies reveal in their application that they have recently received tax assessments, with Adex facing a $45 million debt and over $65 million in interest, while the two Luxembourg-based firms collectively owe more than $92 million in tax and $127 million in interest.
Seeking a halt to debt collection until the resolution of a prior case filed earlier this year, the companies oppose the CRA’s demand for a $115 million security payment from Adex, arguing that such a significant payment would deplete crucial capital earmarked for ongoing development projects.
This application is one of several filed in Federal Court this year concerning the dispute, with claims that enforcing payment would result in irreversible harm and that the lack of prior notice from the CRA prevented adequate preparation for a debt of this magnitude.
Accusing the revenue agency of a pattern of misconduct, the companies allege that CRA officials have disregarded established protocols and the impact of their actions on taxpayer enterprises.
Terry Hui is renowned in British Columbia for his leadership at Concord Pacific Developments. (Ethan Cairns/CBC)
Although legal representatives for the companies were not immediately reachable for comment, Justin Kutyan from KPMG Law in Toronto previously mentioned to The Canadian Press that the transactions in question resemble a tax framework endorsed by the Supreme Court of Canada in 2021.
In a 6-3 decision favouring Alta Energy Luxembourg, the court upheld a tax exemption claim on a capital gain exceeding $380 million under Canada’s Luxembourg treaty, recognized as an international tax haven.
The court’s ruling supported Alta’s position, indicating that Canadian tax authorities cannot use anti-avoidance measures to alter a treaty.
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