A Vancouver man whose company helps foreign buyers avoid the 15 per cent property tax is firing back at claims that what he is doing is illegal.
Zheng Zhao has advertised a business that would allow foreign buyers to purchase property without paying the foreign buyer tax.
Zhao, along with the foreign buyer, would create a B.C.-based corporate partnership; this partnership becomes the legal buyer of a B.C. property.
According to him, because the home is registered under the local corporate entity, not the foreign buyer, the 15 per cent tax is avoided.
In turn, Mr. Zhao is paid off three per cent the property’s closing sale, minus an upfront $2,000 nonrefundable deposit.
Speaking on Steele & Drex, Mr. Zhao says his business is completely legal.
“What I have actually advertised to the entire world, is that a foreign buyer and a Canadian person will establish a partnership which is perfectly legal under the partnership act of British Columbia. This partnership has a perfect legal standing under the British Columbia law.”
Zhao says because the foreign buyers tax only applies to “foreign individuals, foreign corporations and taxable trusts,” he is able to skirt the 15 per cent fee.
“It doesn’t apply to partnerships. It doesn’t apply to Canadian persons. A partnership is a legal structure.”
According to his agreement, Mr. Zhao says the foreign buyer pays for the property, as well as any additional fees, taxes, costs and expenses.
“In return, he’s able to renovate, occupy, use, enjoy and rent out the property at his discretion. Without my interference.”
When asked if what he is doing contributes to the unaffordability crisis in Metro Vancouver, Mr. Zhao said since these purchases are legal, he’s no more to blame than any other buyer making purchases in the market.
Zhao refused to disclose if he currently has any partnerships active at the moment, or if he has ever made a partnership agreement in the past.