Bernard Homes Ltd. v. The Queen, docket 95-2150-GST-G

Date: 19980728

Dockets : 95-2150-GST-G; 95-2152-GST-G; 95-2153-GST-G; 95-2154-GST-G; 95-2155-GST-G; 95-2156-GST-G

BETWEEN:

BERNARD HOMES LTD., SHARYNTON HOMES LTD., COUNTRY MEADOW ESTATES INC., QUIET PASTURE PARTNERSHIP, TEDLEY HOMES LTD. PARTNERSHIP, HARMONY CREEK INVESTMENTS CORPORATION,

Appellants,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Garon, J.T.C.C.

[1] The Appellants have all appealed from assessments issued under Part IX of the Excise Tax Act, (the Act).

[2] An Agreed Statement of Facts dated October 14, 1997 was filed at the hearing of these appeals; this Agreed Statement reads as follows:

AGREED STATEMENT OF FACTS

For the purposes of this appeal, the following facts have been agreed to by the Appellants and the Respondent and accordingly are not at issue herein.

1. The Appellants are Canadian corporations in the business of new home construction.

2. The Appellants are registrants for purposes of Part IX of the Excise Tax Act, R.S.C. 1985, c.E-15, as amended (the “Act”).

3. The Appellants constructed and sold new homes to purchasers and invoiced the purchasers on a Goods and Services Tax (“GST”) included basis.

4. Purchasers who were eligible for the New Housing Rebate of Federal Sales Tax (“FST”) or GST assigned/transferred their rebates to the Appellants.

5. The Appellants did not otherwise pay or credit any amounts to, or in favour of, the purchasers on account of the FST or GST New Housing Rebates.

6. The Appellants calculated their GST collectible in respect of these sales as 7/107ths of the purchase price and calculated the New Housing Rebate as 36% of that amount.

7. As a result of the calculation used by the Appellants, as set out in paragraph 6 above, the Appellants did not include the value of the FST or GST New Housing Rebates as part of the consideration for the sale of the new homes.

8. In assessing the Appellants, the Minister of National Revenue (the “Minister”) recalculated the amount of GST collectible and the amounts of GST New Housing Rebates on the basis that the value of the FST (where applicable) and GST New Housing Rebates formed part of the consideration received by the Appellants on the sale of the new homes and should have been taken into account for the purposes of calculating the net tax payable by the Appellants in respect of the transactions in question.

9. The Appellants objected to the assessments.

10. The assessments were confirmed by the Minister.

11. The issue which this Honourable Court must decide is whether or not the FST (where applicable) and GST New Housing Rebates which were assigned/transferred by the purchasers to the Appellants formed part of the value of consideration for the supply of the new homes.

No other evidence was adduced by the parties.

[3] At the hearing of these appeals, it was agreed that judgment in these appeals will be deferred until judgment is rendered by the Federal Court of Appeal in cases where the Appellants were Trengrove Developments Inc. and a number of other firms and the Respondent was Her Majesty The Queen (Docket A-495-96), hereinafter collectively referred to as the (“Trengrove”) case.

[4] The judgment of the Federal Court of Appeal was delivered from the Bench on May 21, 1998 dismissing the appeals and confirming the judgment of Judge Rip of this Court dated May 22, 1996. The Reasons for Judgment of the Federal Court of Appeal read as follows:

STRAYER, J.A.:

[1] Notwithstanding the concise and effective arguments of counsel for the appellants, we are not persuaded that there is any basis for interfering with the Tax Court decision. The learned Tax Court Judge carefully analysed and applied the relevant provisions of Part IX of the Excise Tax Act and we agree with his conclusions.

[2] The appeal will therefore be dismissed with costs.

[5] On June 26, 1998, a conference call, organized by this Court as a proceeding in these appeals, was held in which counsel for the Appellants and the Respondent participated to discuss the effect of the decision of the Federal Court of Appeal in the Trengrove case on the above appeals. At my invitation during the conference call to make representations in the present matter, counsel for the Appellants did not attempt to distinguish the issue in the present cases from that considered by the Federal Court of Appeal in the Trengrove case mentioned earlier.

[6] Judge Rip had decided in the Trengrove case that the new Housing Rebates, on account of FST and GST, which had been transferred to the builders formed part of the consideration that was subject to GST.

[7] I am of the opinion that the decision of the Federal Court of Appeal is applicable to the present appeals, the issue being the same in both sets of cases.

[8] I therefore come to the conclusion that the FST and GST new Housing Rebates which were assigned/transferred to the Appellants herein formed part of the value of consideration for the supply of the new houses.

[9] Accordingly, the appeals from the assessments are dismissed with costs.

Signed at Ottawa, Canada, this 28th day of July 1998.

" Alban Garon "

J.T.C.C.