In a B.C. Supreme Court civil suit, Guo has accused two former employees of conspiring to steal over $7.5 million from her trust account with forged cheques, laundering funds in a B.C. casino, and ultimately sending cash to China. Guo claims, in court documents, that the employees are jailed in China.
Court transcripts show that in September, Xiao Yong Sun’s lawyer examined Guo in efforts to discover her interests in various investment companies and properties, and also asked Guo to provide documents to prove her former employees are jailed in China.
The lawyer claims that her employees were responsible for the theft of funds, which they shipped off to China. I don’t know about you, but this sounds awfully convenient to me. Finding them in China will undoubtedly be a daunting task as I suspect that the Chinese government will be somewhat less than cooperative when it comes to assisting a Canadian court on a local criminal or civil case.
I guess the moral here is that due diligence is required when you are doing a deal. Perhaps that should include doing some due diligence on your lawyer. It will be interesting to see what the outcome of all this is if the newspaper follows up on it in the future. ∞
A recent report in the Globe & Mail highlights the lending practices with respect to foreign buyers of Canadian real estate. Reading this article is very disturbing. It claims that there is an unwritten bias towards high net worth foreigners who can qualify for mortgages that Canadians would not qualify for. The underwriting guidelines are […]
B.C. urges federal government crackdown on real estate tax cheats
Here is an article in the Globe & Mail discussing the Province of British Columbia’s (B.C.) request to the federal government that it crack down on speculation in residential housing. I have referred to this in an earlier post where those who speculate are, for tax purposes, carrying on an adventure in the nature of trade and hence subject to income treatment on their gains on house purchases and sales rather than availing themselves of the principal residence exemption.
Although an admirable position, I believe that it is very difficult for the Canada Revenue Agency to find them. Unless there is a pattern in the individual’s tax returns of buying and selling houses, a one-off transaction would be difficult to catch. You would need to physically look at the residence to determine use. Not an easy audit task for any government agency.
It’s the same old problem. We do have the rules in place. But their enforcement becomes problematic in that doing so requires human resources that are often not available. So in a sense, it becomes a “toothless tiger”.
In an earlier post, I mentioned that another way to attack this at least with respect to vacant houses is through the property tax system. Enforcement would be much easier at the local level where there are “boots on the ground”. This, in turn, would be backed up by disallowing the principal residence exemption in those cases that surface. This “double punch” would be more than sufficient to cool the flames of those who are looking to speculate in housing. But the devil is in the details.
Interestingly enough, when it comes to certain aspects of enforcing the law, the Province of B.C. takes the following view:
Mr. Kurland also suggested the provincial government should share data with Ottawa, already collected on every property sale, on whether the seller is a resident of Canada for tax purposes. He said he’s been pushing B.C. to do that for two years, because the CRA could then compare property sales data with individual tax records.
He said the Clark government told him that would go against its belief that governments shouldn’t intrude too much into a citizen’s private business.
This is commonly referred to as sucking and blowing at the same time. Privacy trumps illegality apparently in B.C. Perhaps B.C. will institute similar rules to those in place in parts of Europe – the police cannot come into homes at certain hours because it disturbs other local residents. Come on B.C., the rule of law or privacy? Which one is it?
“Why a 15 percent tax? Why now? Why this rate? What’s the purpose? Will it work?” Liu Fei, China’s consul general in Vancouver, said in an interview Thursday. “The issue is how to help young people afford housing,” she added. “I’m not sure even a 50 percent tax would solve the problem.”
There are a couple of points worth mentioning here. What Canada does internally is really none of her business. As a sovereign country, we can do as we wish. But what’s more laughable is the fact that the Chinese government is one of the world’s worst offenders when it comes to impeding foreign investment. Just do a search on the topic and you’ll see a lot of information popping up. It’s the pot calling the kettle black. When China has its own house in order, then they can comment on what others do. As a country that ignores human rights, is a world class polluter and has militaristic tendencies, perhaps they might have other things to do before they are in a position to lecture anyone else.
Here is an interview with an analyst at National Bank Financial. The interesting thing about this interview is how the analyst, Peter Routledge, manages to add little to the discussion. If you listen to him you’ll see. Housing prices will drop if they drop and housing prices will go up if they go up. This is […]