Ontario’s finance minister acted unreasonably when they failed to acknowledge that the pandemic impacted a foreign student’s ability to obtain permanent resident status in time for her to save more than $500,000 in tax on a home she purchased, a provincial court has ruled.
A branch of the Ontario Superior Court of Justice granted an application from Nasrin Yavari, who sought a review of the provincial government’s decision to deny her a tax rebate on the basis that she missed the deadline to become a permanent resident by 10 days, which would have qualified her for a rebate of the non-resident speculation tax.
According to the Divisional Court’s ruling, Yavari bought a home in Toronto in 2017 for $3.3 million — a purchase that carried a 15% tax designed to deter foreign real estate speculators, amounting to $510,000.
She then began attending school in Toronto, obtained two college certificates and secured a work permit — qualifying her to apply for permanent resident status, which was necessary to qualify for a tax rebate.
Ultimately, she was granted permanent resident status in September 2021, four years and 10 days after buying her home — 10 days beyond the deadline to qualify for the rebate.
She applied for the rebate anyway, arguing that the pandemic had impacted the federal government’s processing of applications for permanent residency — specifically, required language and medical testing appointments were delayed for several months due to public health restrictions and affected her application.
Yet, the finance minister denied the rebate on the basis that Yavari missed the deadline to be granted permanent resident status.
Yavari appealed that decision to the court, arguing that she’d only missed the deadline due to the pandemic and that she was not a real estate speculator, as she had lived in the home since buying it.
According to the court, the government maintained that Yavari “took on the risk when she bought the property in 2017 and her circumstances were not special because they were not unlike those experienced by other [foreign buyer] taxpayers.”
But the court sided with Yavari, ruling that the government’s decision to deny the rebate was “unreasonable.” It ultimately quashed that decision.
“The decision ignored the special circumstances central to the applicant’s request for relief, namely the cause of the delays due to Covid-19,” the court said.
“The applicant could not have known when she purchased the property in 2017 that she was taking on the risk of delays in obtaining permanent residency due to an unprecedented Covid-19 pandemic,” it added.
The court also noted that the purpose of the tax is to curb real estate speculation by foreign buyers, and that this was not a case of a foreign speculator using the pandemic as an excuse to avoid the tax.
However, the court declined to order that Yavari be granted the rebate. Instead, it sent the case back to the government to be reconsidered.
“… the minister failed to conduct a proper analysis and is entitled to exercise their discretion on the basis of a proper review of the applicant’s claim. Therefore, the applicant’s request for relief … shall be remitted to the minister to conduct a fresh review in accordance with these reasons,” the court said.