Citation: 2014 TCC 65
Date: 20140303
Docket: 2013-2913(GST)I
BETWEEN:
MESFIN G. HAGOS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rip C.J.
[1]
At the culmination of
Mr. Hagos' hearing of his appeal from an assessment denying him a New
Housing Rebate under Part IX of the Excise Tax Act ("Act"),
I informed him that I would be dismissing his appeal and give reasons for
judgment later. These are the reasons.
[2]
On or about
March 7, 2010 Mr. Hagos signed an Agreement to Purchase
("Agreement") a residential property in Brampton, Ontario for
$499,634. The property is part of a development of "36 All‑Brick
Detached Homes". The price of the model home purchased by Mr. Hagos
was advertised at $454,990 with a note that "development charges, levies and
HST are included in the Purchase Price". The purchase price excess of the
advertised price was in consideration of a premium lot and upgrades. According
to Mr. Hagos' calculation the purchase price of the property was
$499,633.59 plus closing costs of $2,799.55 for a total of $502,433.14. The
closing price of $526,433.14 was an "artificial cost"; there is a
discrepancy of $24,000. It is this $24,000 that he wants returned to him.
[3]
The closing of the
transaction of purchase and sales was July 7, 2011. At time of execution
of the Agreement, Mr. and Mrs. Hagos intended to reside on the property.
[4]
Sometime before the
closing date, Mr. and Mrs. Hagos changed their minds. The property would
be purchased for an investment purpose, that is, to rent.
[5]
Nevertheless, on
closing Mr. and Mrs. Hagos assigned to the Vendor the HST rebate and
executed a Declaration that they were eligible "to apply for a GST/HST New
Housing Rebate (for Homes Purchased from a Builder), in accordance with the
provisions and requirements of the Act, as amended in respect of the
purchase" of the property and "have assigned all of our right and
entitlement to receive payment of such GST/HST New Housing Rebate to" the
vendor.
[6]
The Statement of
Adjustments with respect to the transaction was prepared by Mr. and
Mrs. Hagos' solicitor. He credited Mr. and Mrs. Hagos with a HST
rebate assigned to the Vendor of $24,000, a deposit of $30,000 and a balance at
closing of $526,433.14 after various adjustments. Mr. Hagos does not agree
with the fact his solicitor was correct in crediting the $24,000 to him and
Mrs. Hagos. He insists the lawyer erred. He did not, as far as I am aware,
bring this error, if it is an error, to his solicitor's attention.
[7]
A "GST"
article was included in the Agreement:
(a) The parties acknowledge and agree that the Purchase Price
stipulated in the within Agreement is inclusive of the Federal Goods and
Services Tax ("GST") payable pursuant to the Excise Tax Act (Canada)
(the "GST Legislation") and that the actual consideration for the
Dwelling Unit exclusive of any extras, requested changes or adjustments as
herein provided, is the amount derived by subtracting the GST payable with
respect to the within transaction of Purchase and Sale (less all refunds,
credits and rebates available to the Purchaser pursuant to the GST Legislation)
from the Purchase Price (the "Consideration"). The Purchaser
acknowledges and agrees that the Vendor shall insert the Consideration in the
Transfer of the Property that the Vendor delivers to the Purchaser on the date
of Closing. The Purchaser covenants and agrees to pay the GST as required by
the GST Legislation.
(b) In consideration of the Purchase Price being inclusive of
GST, the Purchaser hereby irrevocably assigns to and in favour of the Vendor
any and all rights he may have on the date of Closing or thereafter to any
refunds, credits, rebates (the "Rebates") available with respect to
the within transaction of Purchase and Sale pursuant to the GST Legislation.
Subject to subparagraph (d) below, the Purchaser covenants, warrants and
represents that the Purchaser is an individual and that he shall forthwith
following the date of Closing personally occupy the Dwelling Unit or cause one
or more of his relations (as defined in the GST Legislation) to occupy the
Dwelling Unit as his or their primary place of residence (as defined in the GST
Legislation) for such period of time as shall then be required in order to
entitle the Purchaser to the GST New Housing Rebate pursuant to the GST
Legislation.
(c) Subject to subparagraph (d) below, the Purchaser
covenants and agrees to deliver to the Vendor, on the date of Closing or
anytime thereafter, any and all assignments, directions, applications,
consents, declarations, undertakings and other documents required by the Vendor
to enable the Vendor to apply for and receive the GST New Housing Rebate
pursuant to the GST Legislation. The Purchaser hereby irrevocably nominates,
constitutes and appoints any officer of the Vendor with full power of
substitution, as the Purchaser's true and lawful attorney and agent pursuant to
the provisions of the Powers of Attorney Act, R.S.O. 1990, with full
power and authority in the Purchaser's name, place and stead, to execute, swear
to and record any and all documents that may be required in order to have the
GST New Housing Rebate paid and/or credited to the Vendor. The Power of
Attorney hereby granted is granted in accordance with the Powers of Attorney
Act of Ontario and is irrevocable, shall survive the date of Closing, and
will extend to and be binding upon the heirs, executors, administrators,
successors and assigns of the Purchaser.
(d) In the event that the purchaser shall for any reason, fail
to qualify for the GST New Housing Rebate, the Purchaser shall indemnify the
Vendor in the amount that the Purchaser would have been entitled to had the
Purchaser so qualified for the said rebate, and in the event that such failure
to qualify is known on or before the date of Closing, the Vendor shall be
credited in the Statement of Adjustments with the amount of GST New Housing
Rebate.
[8]
A completed
"GST/HST New Housing Rebate Application for Houses Purchased from a
Builder" (Form GST190 E (10)) form was signed by both
Mr. Hagos and an authorized official of the builder on July 7, 2011
and was sent to the Canada Revenue Agency ("CRA"). Mr. Hagos
remarked that the closing date was almost a year after he signed the Agreement
to purchase the property and, at closing, he had "no choice" but to
sign New Housing Rebate Application for Houses Purchased from a Builder and the
Declaration of his and Mrs. Hagos' eligibility to apply for the New
Housing Rebate. Otherwise, he said, the sale would not close and he would
forfeit the $30,000 deposit. Nevertheless he knew what he was signing when he
executed these documents at closing.
[9]
After crediting Mr. and
Mrs. Hagos with the amount of the New Housing Rebate, the builder filed
the New Housing Rebate application on August 24, 2011 with its GST/HST
return and claimed the rebate amount as an adjustment to its net tax. The
Minister of National Revenue ("Minister") allowed the rebate and
credited the builder in the amount of the rebate.
[10]
Later, on
April 10, 2012, Mr. Hagos filed a GST/HST New Residential Rental
Property Rebate ("NRRP") with respect to the Property. The Minister
approved the NRRP rebate and sent a notice of assessment dated July 30,
2012 to the appellant showing a refund in the amount of $24,159.11.
[11]
Upon review of the
appellant's application for a New Housing Rebate for Homes Purchased from a Builder,
the Minister determined that the rebate ought not to have been allowed and
ought not to have been credited to the builder. As a result the Minister denied
the New Housing Rebate to the appellant because he did not acquire the Property
as his or a relation's primary place of residence, and neither the appellant
nor a relation were first occupants of the Property. A notice of assessment
claiming the overpayment of the rebate was sent to the appellant on
July 30, 2012; ss. 254(2) and (2.1), s. 264 and
ss. 297(2.1) of the Act.
[12]
The appellant denied
the Minister's assumptions that he assigned the New Housing Rebate to the
builder, notwithstanding documentation to the contrary that the builder
credited him in the amount of $24,000 for the New Housing Rebate and notwithstanding
his own solicitor's statement of adjustments crediting him with this amount.
[13]
It appears to me that
if Mr. Hagos feels he has been overcharged for the Property, his claim is
not against the Minister.
[14]
Clearly, the appellant
has applied for two new housing rebates with respect to the same property, one
a New Housing Rebate for Home Purchased from a Builder and a second rebate, a
New Residential Rental Property Rebate. Subsection 262(2) of the Act is
found in Division VI of the Act. It provides that:
|
Only one
application may be made under this Division for a rebate with respect to any
matter.
|
L'objet d'un
remboursement ne peut être visé par plus d'une demande selon la présente
section.
|
[15]
The applications for
the New Housing and NRRP rebates were made under Division VI of the Act.
He had already received a rebate when applying for the NRRP rebate.
[16]
The appeal is
dismissed.
Signed at Ottawa, Canada, this 3rd day of March 2014.
"Gerald J. Rip"
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