Agence du revenu du Québec v. Héroux, 2025 QCCA 1167

The taxpayer, who was not registered for QST purposes, constructed various new rental units in 2014 and 2015. After the expiry of the two-year period under the Quebec equivalents of ETA s. 257(1) for claiming input tax refunds (ITRs), and under ETA s. 256.2(7)(a)(iii) for claiming the new rental housing rebate (NRHR), the taxpayer filed QST returns in which he self-assessed QST on the fair market value (FMV) of the facilities when they were first rented out and claimed NRHR and ITR rebates, resulting in a net refund claim.

The ARQ increased the QST that the taxpayer had self-assessed based on increased FMVs, and denied the refund claims on the basis that the two-year periods for making such claims had expired.

The principal issue was whether s. 30.5 of the Tax Administration Act (Quebec) required the ARQ to take such refund claims into account when assessing, given that para. 2(a) of that provision stipulated that such requirement did not apply where "a claim was made and not refused in respect of the refund before the day on which the Minister made the assessment".

In finding that the 2(a) exclusion only applied where a refund claim had previously been made within the two-year normal claim period, so that it did not apply to the taxpayer whose refund claims instead had been made late, Hamilton JCA stated (at para. 40, TaxInterpretations translation, see also para. 54):

The [2(a)] exception aims to prevent double refunds: if the person has a refund claim that is pending at the time of the notice of assessment, it must, in principle, proceed. However, in this case, the refund claims were late. They were formally refused in the notice of assessment, as they were doomed to fail from the outset due to the expiration of the deadline. On the facts, they were void. … Those claims should not, however, prejudice his rights. In other words, exception (a) must be interpreted as being limited to claims that could be accepted and could lead to double refund, and thus only to those submitted within the two-year period prescribed by statute.

After referring (at para. 42) to the “presumption of coherence between provincial and federal statutes in GST/QST matters” and to the somewhat similar wording of the exclusion in ETA s. 296(2.1)(b), he stated (at para. 44):

ETA paragraph 296(2.1)(b) pursues the objective previously mentioned in connection with the interpretation of TAA art. 30.5, para.(2)(a), namely to avoid a double refund, and the "claim" mentioned in paragraph 2(b) can therefore be understood as a claim that is not void and could result in a refund.

The taxpayer, who was not registered for QST purposes, constructed various new rental units in 2014 and 2015. After the expiry of the two-year period under the Quebec equivalents of ETA s. 257(1) for claiming input tax refunds (ITRs), and under ETA s. 256.2(7)(a)(iii) for claiming the new rental housing rebate (NRHR), the taxpayer filed QST returns in which he self-assessed QST on the fair market value (FMV) of the facilities when they were first rented out and claimed NRHR and ITR rebates, resulting in a net refund claim.

The ARQ denied the refund claims on the basis that the two-year periods for making such claims had expired. Before going on to find that s. 30.5 of the Tax Administration Act (Quebec) required the ARQ to take such refund claims into account when assessing the taxpayer, Hamilton JCA stated, regarding the QSTA equivalent of ETA s. 225(1) – B(a) and (b) (paras. 27-28, TaxInterpretations translation):

First, Article 428 of the QSTA distinguishes between refunds and deductions. It is clear that the amounts at issue in the present case are refunds and not deductions. Paragraph (b) of the definition of B therefore cannot apply.

Next, paragraph (a) is limited to an "input tax refund." This refers to ITCs, which do not apply in this instance since the respondent is a non-registrant.

After referring (at para. 42) to the “presumption of coherence between provincial and federal statutes in GST/QST matters,” Hamilton JCA went on to indicate that it appeared that ETA s. 296(2.1)(c) should be similarly interpreted similarly to the interpretation that he had accorded to s. 30.5, para. 2(a) of the Tax Administration Act (Quebec).