[OFFICIAL ENGLISH TRANSLATION]
Date: 19980128
Docket: 96-3633(GST)I
BETWEEN:
SERGE TOUSSAINT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
G. Tremblay, J.T.C.C.
Point at issue
[1] According to the Notice of Appeal
and the Reply to the Notice of Appeal, the issue is whether the
appellant is entitled to the Goods and Services Tax ("GST") new
housing rebate. The appellant apparently owned a four-unit
property in Hâvre-St-Pierre.
[2] The respondent argued that the
rebate applies only to an owner of a single unit residential
complex, which includes a multiple unit residential complex
containing two residential units.
Burden of proof
[3] The appellant has the burden of
showing that the respondent's assessment is incorrect. This
burden of proof results from a number of judicial decisions,
including a judgment of the Supreme Court of Canada in
Johnston v. Minister of National Revenue.[1]
[4] In that judgment, the Court
decided that the facts assumed by the respondent in support of
his decision are also deemed true until there is evidence to the
contrary. In the case at bar, the facts assumed by the respondent
are set out in subparagraphs (a) to (d) of Paragraph 5 of the
Reply to the Notice of Appeal. This paragraph reads as
follows:
[TRANSLATION]
5. In
assessing the appellant, the Minister relied, inter alia,
on the following conclusions and assumptions of fact:
(a) the appellant
applied for a rebate of the sales tax on a four-unit residential
complex; [denied]
(b) the civic
address of this property is 1223 and 1225 Boréale Street,
Hâvre-St-Pierre; [admitted]
(c) the property is
divided into four separate units, namely, 1223A, 1223B, 1225A and
1225B; [admitted]
(d) the appellant is
not a registrant for the purposes of the Excise Tax Act
(R.S.C. 1985, c. E-15); [denied]
Facts produced in evidence
[5] In addition to the above
admissions, the evidence was completed by the appellant's
testimony and the filing of Exhibits A-1 to A-3 and I-1 and
I-2.
[6] In 1994, the appellant, who is a
teacher at L'Eau Vive school in Québec, lived on
Boréale Street in Hâvre-St-Pierre (Iles de la
Madeleine) where he also taught. He lived in a house owned by
him. However, since he had three children and his wife was
expecting a fourth, he decided to build a second house.
Construction work on the house began in November 1994 and ended
in April 1995.
[7] Construction of the house was made
possible through a loan from the Caisse populaire Desjardins de
Hâvre-St-Pierre and the application for loan insurance was
accepted by the Canadian Mortgage and Housing Corporation
("CMHC"). [TRANSLATION] "The application had been made in
accordance with the insurance criteria for an owner-occupant."
According to the letter from CMHC (Exhibit A-1), the loan
requested was $117,420.
[8] According to the contract entered
into between the appellant and M. A. Richard, Contractor,
(Constructions RICOR Inc.) on November 8, 1994 (Exhibit A-2), the
contractor promised to:
[TRANSLATION]
To supply and deliver on the customer's foundations in
Hâvre-St-Pierre, a 26' x 52' single family
semi-detached Domicilex house, 2 electrical boxes, baseboard
heating in basement, 2 hot water tanks, 2 basement steps, 2 full
bathrooms, melamine vanity, 2 kitchens, melamine cupboards, 2 5'
patio doors, PVC crank window frames, vinyl siding exterior, 2
front doors, combined frames, 6 basement windows, 2 melamine
vanities, 2 premoulded bathtubs, 2 toilets, 2 washstands and
fitting, all according to Domicilex standard specifications.
The price agreed was $74,200. The customer, Mr. Toussaint, was
responsible for some of the work, however, including foundations,
plumbing, and connections to municipal services. According to the
appellant, what was involved was in fact a duplex.
[9] In his Notice of Appeal, Mr.
Toussaint described what follows as being his [TRANSLATION]
"fixed objectives": "I was to live in the property at number 1223
and rent the other property at number 1225, which consisted of
two units. On about April 15, 1995, I claimed an amount of
$2,625.26 as a GST rebate for the property (at number 1223) that
I was to live in." The application for the GST rebate was filed
as Exhibit I-2 and states the following information:
|
D- Rebate calculation (complete only Part I,
II or III)
|
|
|
PART I Rebate calculation for housing
where GST has been paid on new or substantially renovated
housing, a new mobile home or floating home (this part must
be completed by claimants who checked Box 1A, 2 or 4 in
Section B)
|
|
|
|
|
|
|
|
|
|
|
Total GST paid or payable on the home or
dwelling unit or for the construction or renovation of a
house
|
A
|
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$7, 292.38
|
|
|
|
|
Purchase price/ Fair market value (GST not included)
|
B
|
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$104,414.84
|
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A: $7,292.38 x 36% (maximum $8,750)
|
C
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$2,625.26
|
1) If B is $350,000 or less, enter
C.
Total rebate amount
2) If B is more than $350,000, enter the result of
the following calculation:
$2,625.26 ($450,000 - B
X C: $ =
$ (If negative,
enter
0.)
[10] Construction of the house was completed
in April 1995. Being informed shortly before that his teaching
services would no longer be needed in Hâvre-St-Pierre, the
appellant moved to Drummondville, Quebec, in April 1995 to look
for another job.
[11] In his Notice of Objection of November
10, 1995, Mr. Toussaint explained the facts but in greater
detail:
[TRANSLATION]
When I had the immovable properties built at 1223 and 1225
Boréale Street, Hâvre-Saint-Pierre, my intention was
to rent number 1225 (1 X 4½ and 1 X 3½) and make
1223 my residence (ref: CMHC and the Hâvre-Saint-Pierre
Caisse Populaire). In April 1995, I lost my job; I was forced to
sell the two properties before I could occupy the unit (1223) and
to move to Drummondville to look for another job.
[12] Before leaving the
Iles-de-la-Madeleine, the appellant had rented the units in the
new house to four tenants: Luc Petitpas, Dany Tremblay, Daniel
Vigneault and Gilles Choudusse (Exhibit I-1). Gilles Choudusse
later purchased from the appellant the two houses he owned, that
is, the one that he was already occupying and the new four-unit
property.
[13] The appellant's application is for a
"single unit residential complex". The definition is found in
subsection 256(1) of the Excise Tax Act:
256(1) Definitions In this section,
"single unit residential complex" includes a multiple
unit residential complex that does not contain more than two
residential units.
[14] Although in his Notice of Objection
(para. [11]) as well as in his Notice of Appeal (para. [9]), the
appellant claimed that his intention was to subsequently live in
the property situated at 1223 Boréale Street in
Hâvre-St-Pierre, it is clear, nevertheless, from the rebate
application (para. [9], Exhibit I-2) that the fair market value
of the property on which he based his claim was $104,414.84,
i.e., the price for 1223 Boréale Street, and that he
occupied both dwelling units at number 1225.
[15] This confirms, then, that the property
was taken as a whole and that, although the appellant had lived
in 1223 Boréale Street, the entire property consisted of
more than two residential units. The definition of a "single unit
residential complex" in subsection 256(1) of the Excise Tax
Act is therefore not met.
Conclusion
[16] The appeal is dismissed.
J.C.C.I.
Québec, Canada, this 28th day of January 1998.
Translation certified true
on this 4th day of June 2003.
Sophie Debbané, Revisor
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