Casa Blanca - Tax Court finds that HST is not chargeable on the assignment of a right to a deposit

Suppose that a registrant has entered into an agreement to acquire real estate for $1M and then, after the real estate has appreciated to $1.1 million, assigns the purchase agreement to an assignee for an "assignment fee" of $0.1M plus a further amount of $0.1M to reflect that the deposit will now be held by the property's vendor for the account of the assignee.  CRA characterizes this as a single supply of real estate for $0.2M so that, in the absence of any exemption, HST is payable on this full amount.

Hogan J disagreed.  The assignment of the purchase agreements and of rights to the deposits were not inextricably linked, as it would be quite possible to structure a sale where there was no assignment of the deposit and the assignee gave a fresh deposit to the property vendor.  Accordingly, there were two supplies: of an interest in real property; and of a financial instrument (a right to money).  In the alternative, there is no supply at all respecting the deposit as the definition of property excludes money.

Neal Armstrong.  Summary of Casa Blanca Homes Ltd. v. The Queen, 2013 TCC 338 under ETA - 123(1) - supply.