St-Joseph – Court of Quebec finds that the transformation of 2 floors of commercial building to residential use did not qualify as a “cessation” of commercial activity for QST purposes

Starting in 2002, St-Joseph incurred costs in converting the 1^st and 2^nd floors of a 12-storey mixed-use tower from commercial rental use into residences for rental to seniors.

St-Joseph argued based on the QSTA equivalent of ETA s. 141.1(3)(a) that it had incurred the costs “in connection with the … termination of a commercial activity” of it, so that such costs were deemed to have been incurred in the course of its commercial activity. In rejecting this submission, and in confirming the denial of input tax refunds, Lachapelle JCQ stated (at paras. 93, 103, TaxInterpretations translation):

[T]he intention of St-Joseph was that the work carried out on the first and second floors of the Building was to adapt the building for residential or lodging use of individuals. …

The Court concludes that the concept of the cessation of an activity does not include the transformation of the activity.

Neal Armstrong. Summary of St-Joseph Immobilier Inc. v. Agence du revenu du Québec, 2024 QCCQ 766 under ETA s. 141.1(3)(a).