British Columbia property companies controlled by developer Terry Hui have filed a Federal Court application seeking to block a $91-million tax assessment stemming from a 12-year audit by the Canada Revenue Agency, The Canadian Press reported.

Vancouver-based Adex Securities, One West Holdings and an affiliated numbered B.C. company are asking the court to prevent the minister of national revenue from issuing tax assessments covering the 2007 to 2013 taxation years.

According to the filing, the audit began in 2013 and focused on payments to related corporations in Luxembourg, examining potential tax avoidance and alleged “treaty abuse,” CP reported. The transactions involve the routing of interest payments through Luxembourg entities, which the developers argue were not undertaken for tax-avoidance purposes.

The companies state in their application that they would “suffer irreparable harm” if required to pay the $91-million tax bill, plus interest, adding they could not have “reasonably planned for a debt of this magnitude” without advance notice from the minister, CP reported while citing the court filing.

The filing claims the loss of $91 million in working capital could halt one or two construction projects, although counsel for the companies, Justin Kutyan of KPMG Law in Toronto, said no current developments are at risk.

“There’s no current projects that could be affected by this,: he told CP. “It’s only future projects that we’re anticipating.”

He noted that there has been no determination as to which prospective projects could be jeopardized.

Kutyan said the transactions are similar to a tax structure upheld by the Supreme Court of Canada. In a 2021 decision involving Alta Energy Luxembourg, the high court ruled in favour of the company, which had claimed a tax exemption on a capital gain of more than $380 million under Canada’s tax treaty with Luxembourg, described in the decision as being “well known as an international tax haven.”

The Hui-controlled companies argue that the Alta decision marked an “evolution of the law,” which officials at the CRA acknowledged while the audit was ongoing, CP reported.

Ottawa has not yet filed a response, and no hearing date has been set, according to court records, according to CP.

Hui is also president and CEO of Vancouver-based Concord Pacific, one of Canada’s largest development companies. Adex is Concord Pacific’s parent company. One West specializes in the leasing and management of high-end residential properties in the Greater Vancouver Area.

Pictured: Downtown Vancouver waterfront

Photo: One West