B.C. property mogul Terry Hui’s companies have accused the Canada Revenue Agency (CRA) of engaging in what they claim is a consistent pattern of misconduct in their efforts to recover escalating tax debts dating back to 2007.
Five entities affiliated with Hui’s real estate development conglomerate face scrutiny in the CRA audit, with Adex Securities, One West Holdings, a B.C. numbered company, and two shell companies registered in Luxembourg being the primary targets.
In a recent Federal Court filing, the companies allege that the government has unjustly pursued the collection of tax arrears amounting to nearly $330 million, predominantly in the form of accrued interest. The application highlights the involvement of the group in capital-intensive property ventures across Toronto, Vancouver, and Calgary, with a focus on transactions leveraging Canada’s tax agreement with Luxembourg, initiated in 2013.
According to the court documents, the companies have received tax assessments this year, revealing significant debts. Adex is facing a $45 million principal sum along with over $65 million in interest, while the Luxembourg-based firms collectively owe more than $92 million plus $127 million in interest.
Seeking reprieve, the companies are urging the court to halt the debt collection process until the resolution of a related lawsuit filed earlier this year. They contest the CRA’s demand for a $115 million security deposit from Adex, arguing that complying with such a hefty payment upfront would impede their ability to fund ongoing development projects.
This application is one of several lodged in Federal Court this year regarding the dispute, with the companies asserting that immediate payment would result in irreparable harm. They claim that the CRA’s actions deviated from established protocols and failed to consider the repercussions on their business operations.
Legal representatives for the companies were not reachable for immediate comment. However, Justin Kutyan from KPMG Law in Toronto previously noted similarities between the case transactions and a tax structure upheld by the Supreme Court of Canada in 2021.
In a separate case involving Alta Energy Luxembourg, the Supreme Court ruled in favor of a tax exemption on a capital gain exceeding $380 million under the Canadian-Luxembourg tax treaty. The decision underscored that Canadian tax authorities cannot alter tax treaties through anti-avoidance measures.
While dissenting opinions highlighted concerns over potential tax avoidance loopholes, the CRA declined to provide a spokesperson for interview regarding the issue of tax treaty abuse.