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Citation: 2004TCC192
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Date: 20040309
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Docket: 2003-3267(GST)I
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BETWEEN:
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BLANCHE'S HOME CARE INC.,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the
Informal Procedure was heard at Saskatoon, Saskatchewan on
February 26, 2004. Dan McDonald, a representative of the
Appellant, was the only witness.
[2] Paragraphs 3 to 19 of the Reply to
the Notice of Appeal set out the matters in dispute. They
read:
3. With
respect to Part "F" of the Notice of Appeal, he states
that paragraph 2 is in the nature of argument. To the extent that
it does contain any relevant allegations of fact to admit or
deny, he denies them. For greater certainty, he states that
a GST application Ruling dated May 2, 2003 stated that the
Appellant's supply under its Admission Agreement was an
exempt supply of service under both Schedule V, Part II, section
2 and Schedule V, Part IV, section 2 of the Excise Tax
Act.
4. With
respect to Part "F" of the Notice of Appeal, he states
that paragraphs 1, 3, 4 and 5 are in the nature of argument and
contain no relevant allegations of fact to admit or deny.
5. On August
30, 2002, the Minister of National Revenue (the
"Minister") received from the Appellant a GST New
Residential Rental Property Rebate Application (the
"Application") in which the Appellant claimed a rebate
for $6,680.70 (the "Rebate") in respect of GST paid on
the purchase of the Home.
6. The
Minister assessed the Appellant by Notice of Assessment dated
November 4, 2002, denying the Appellant the Rebate.
7. The
Appellant objected to the Notice of Assessment by Notice of
Objection dated November 13, 2002.
8. By Notice
of Decision dated June 20, 2003, the Minister confirmed the
assessment.
9. The
Appellant's Notice of Appeal was filed in this Court on
September 16, 2003.
10. In assessing the
Appellant and in confirming that assessment, the Minister assumed
the same facts, which are as follows:
a) the Appellant
is a corporation;
b) the
Appellant entered into a Purchase and Sale Agreement with North
Ridge Development Corporation on December 4, 2001;
c) in the
Purchase and Sale Agreement, the North Ridge Development
Corporation agreed to construct a building and to sell it and the
land that the building was to be situated on to the
Appellant;
d) the
building and the land were located at civic address 1322
Konihowski Road in Saskatoon, Saskatchewan;
e) the Appellant
is not a GST registrant;
f) the
Appellant did not claim input tax credits in respect of the GST
paid;
g) the
Appellant filed an Application claiming the Rebate in respect of
GST paid on the purchase of the land and the building;
h) the
Appellant obtained a licence to operate the building as a
"personal care home" (the "Home") under the
Province of Saskatchewan's Personal Care Homes Act and
Personal Care Homes Regulations, 1996;
i) the
Appellant and each resident entered into a written Admission
Agreement (the "Admission Agreement") respecting the
terms and conditions of residence in the Home;
j) the
Appellant provides residents with accommodation, meals and
supervision or assistance with personal care;
k) the maximum
number of residents the Home accommodates is ten;
l) the
Home has specialized equipment including a ramp, easy access
bathtub, safety bathtub, raised toilets with bars and level door
handles;
m) the Appellant
provides direct assistance to, or supervision of, the residents
in performing their activities of daily living, which include but
are not limited to eating, bathing, dressing, grooming,
participating in social and recreational activities and in taking
medication;
n) the
Appellant provides residents with 3 nutritionally balanced meals
each day; nutritious snacks between meals and at bedtime; on-site
supervision on a 24-hour basis; laundry, supervision of grooming,
bathing, dressing and nail care, arranging for transportation; a
safe place to store medications; home based social and
recreational activities; pick-up of prescriptions and arranging
for refills; and recognition of special occasions;
o) the
Appellant requests written assessments of a resident's care
needs by an assessment agency within seven days after the
resident is admitted to the Home;
p) the
Appellant provides residents with additional care and assistance
that is required as a result of an assessment of a resident's
care needs, including mobility assistance, specialized care and
cognitive care;
q) the
Appellant develops care plans for each resident within seven days
after the resident is admitted to the Home;
r) the
Appellant identifies in the care plan the types of assistance or
supervision that residents need in their activities of daily
living and addresses their physical, cognitive, emotional, social
and spiritual needs; and
s) residents
pay a fixed monthly fee for the accommodations, meals,
supervision, care, and services outlined in the above
subparagraphs (m) through (r).
B. ISSUES
TO BE DECIDED
11. The issues to be
decided are as follows:
a) Is the
Appellant eligible for a GST New Residential Rental Property
Rebate in respect of GST paid on the purchase of the land and the
building?
b) Were any of
the rights of the Appellant guaranteed by subsection 15(1) of the
Canadian Charter of Rights and Freedoms (the
"Charter") denied or infringed?
c) If any of
the rights of the Appellant have been denied or infringed, is the
infringement reasonable within the meaning of section 1 of the
Charter?
C.
STATUTORY PROVISIONS
11. He relies on section
123(1), subsection 256.2, and Schedule V, Part I, sections 5.1,
6, 6.1 and 7 of the Excise Tax Act, R.S.C. 1985, c. E-15,
as amended; and sections 1 and subsection 15(1) of the
Canadian Charter of Rights and Freedoms.
D.
GROUNDS RELIED ON AND RELIEF SOUGHT
12. He submits that a
"supply" as defined in subsection 123(1) of the
Excise Tax Act "means, subject to sections 133 and
134, the provision of property or a service in any manner,
including sale, transfer, barter, exchange, licence, rental,
lease, gift or disposition."
13. He submits that a
"service" as defined in subsection 123(1) of the
Excise Tax Act "means anything other than
property...".
14. He submits that the
Appellant is making a single supply of a "service" as
defined in subsection 123(1) of the Excise Tax Act and
therefore the Appellant cannot be making a supply of
"property".
15. He submits that the
supply made by the Appellant to the residents under the Admission
Agreement is not a supply of a "qualifying residential
unit" as defined in subsection 256.2(1) of the Excise Tax
Act.
16. He submits that the
Appellant is not holding a "qualifying residential
unit" as defined in subsection 256.2(1) of the Excise Tax
Act.
17. He submits that the
Appellant is not holding a "qualifying residential
unit" for the purpose of making exempt supplies that are
included in Schedule V, Part I, section 6 of the Excise Tax
Act.
18. He submits that the
Appellant did not supply a residential unit in a residential
complex by way of lease, licence or similar arrangement for the
purpose of its occupancy as a place of residence or lodging by an
individual and, accordingly, the subject supply is not an exempt
supply as contemplated in Schedule V, Part I, section 6 of the
Excise Tax Act.
19. He submits that
subsection 15(1) of the Charter does not apply to the
Appellant since the Appellant is a corporation and not an
individual.
[3] The Appellant is a corporation,
not an individual. Therefore the Charter has no
application to this appeal.
[4] None of the assumptions except
10(p) were refuted. Respecting assumption 10(p),
Mr. McDonald's testimony is accepted: the
Appellant's care is primarily of a supervisory nature. It
reminds residents to take their drugs or to eat their meals and
provides assistance in a supervisory manner. It does not provide
medical or any form of intense care. If restraint or something
similar becomes necessary, it is only done on an interim basis by
the Appellant while a proper nursing home is found. The residents
usually come to the Appellant on reference from a hospital or
similar source because they are living alone and have come to
need forms of reminder or supervision which does not amount to a
form of physical or nursing care.
[5] The Appellant operates 1322
Konihowski Road as a licenced personal care home under The
Personal Care Homes Act, R.S.S., P-6.01, which defines a
personal care home in section 2 as "... a facility that
provides: (i) accommodation and
meals; and (ii) supervision or assistance with personal care; to
an adult...". While this Act does not appear to require
care receivers to reside in the home, the definition of
"care" in section 2 of its Regulations is "the
provision of care... to a resident." A
"resident" is defined in the Regulations as "an
adult... who resides in the home for the purpose of
receiving personal care."
[6] The definition of
"resident" quoted from the Regulations is in accord
with Mr. McDonald's testimony. Most of the
Appellant's residents previously lived alone in their own
homes - whether they were apartments or houses. They moved into
1322 Konihowski Road "for the purpose of receiving personal
care". In other words, it was not to have a roof over their
heads. It was because they needed the personal care services that
the Appellant provides. (And although this opinion plays no part
in the Court's decision, it is clear that both the quality of
the premises and the quality of the services provided by
Blanche's are exemplary and appear to set the standard for
personal care in homes in Saskatoon.)
[7] Mr. McDonald testified that
the Appellant's current fee is $1,750 per month. By
comparison, an average one bedroom apartment in Saskatoon rents
for $500 per month. (That is average, not exemplary.)
Mr. McDonald also testified in cross-examination, that about
$1,000 of the monthly fee is likely consideration for services.
Thus, more than 50% of the monthly fee is for personal care
services and not for simple residential accommodation. The
average age of a resident is between 85 and 90. Most have a
medical problem such as Alzheimer's disease.
[8] Although The Personal Care
Homes Act doesn't say so, its Regulations make a
residential unit necessary to such a home. That is the first
ingredient for the concept of "resident" to occur. But
the services provided cannot be omitted because they constitute
the "care" provided by the licensee which are detailed
by the Regulations right down to a plan of care and a five week
planned menu of meals and snacks. Thus the two are interconnected
and intertwining. Each is an integral part of the composite
whole. The compound supply cannot be split up for tax purposes.
They are rendered under a single contract for a single
consideration. (See Rip, J., O.A. Brown Ltd. v.
Canada, [1995] G.S.T.C. 40 (T.C.C.), esp. paras. 27
and 29.)
[9] Mr. McDonald argued quite
sensibly, that what the Appellant provides is a "primary
place of residence" and that the rest is subsidiary to that.
But even forgetting about the relative costs or considerations in
the $1,750 monthly fee, it is not possible for the Court to
separate the components based upon the evidence before the
Court.
[10] For this reason, the appeal is
dismissed.
Signed at Regina, Canada, on this 9th day of March, 2004.
Beaubier, J.
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