Zubic v. The Queen, 2004 TCC 533 (Informal Procedure)

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Appeal heard on December 17, 2003 at Windsor, Ontario

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JUDGMENT

          The appeal from the assessment made under the Excise Tax Act, notice of which is dated June 4, 2002 and bears number 02100008412370006 is dismissed in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 22nd day of September, 2004.

Sheridan, J.

REASONS FOR JUDGMENT

Sheridan, J.

[1]      The Appellant, Nikola Zubic, immigrated to Canada from Bosnia during the years when that country was in turmoil. He arrived unable to speak English, without employment and full of hope. Less than a decade later, he had established himself as a Canadian citizen with a good career, settled his family in the community and built himself a house. It is this last accomplishment that brought him before this Court. As permitted by the Excise Tax Act Mr. Zubic applied for a rebate of the GST paid in the construction of his house. His application for a rebate of $4,109.25 was disallowed on the grounds that he had not filed his application within the time limit set out in subsection 256(3) of the Act.

[2]      The relevant provision of the Excise Tax Act read as follows:

256(2) Where

(a)         a particular individual constructs ... or engages another person to construct ... a residential complex that is a single unit residential complex ... for use as the primary place of residence of the particular individual ...the Minister shall, subject to subsection (3) pay a rebate to the particular individual ...

This general section giving the Minister of National Revenue the authority to pay the GST rebate is restricted by subsection 256(3) which states that "[a] rebate under this section in respect of a residential complex shall not be paid to an individual unless the individual files an application for the rebate within two years after the earliest of:

(a)         the day that is two years after the day the complex is first occupied ...

(a.1)      the day ownership is transferred ..., or

(b)         the day construction or substantial renovation of the complex is substantially completed".

[3]      Mr. Zubic represented himself at the hearing. He admits that he and his family occupied the house in February 1997 and that construction was substantially completed by September 1997. Nor does he deny that he did not file his application until March 2002, some three years after the deadline. The issue is, having regard to Mr. Zubic's failure to apply within the statutory time limit, whether the GST rebate can be paid to him.

[4]      Shortly after moving into the house in February 1997, Mr. Zubic went to the Taxation Office in Windsor to find out how to go about applying for a GST rebate. As a result of his conversations with the GST officials, he came away with the impression that even though he was occupying the house, he was not eligible to apply because it was not yet completed. His understanding was that he could not apply until two years after completion of the construction; he understood "completion" to mean the moment when the house had undergone its final inspection. Satisfied that he still had plenty of time to claim the GST, Mr. Zubic resumed work on the house as time and resources permitted. At the time, he was the sole breadwinner for his family of six, working his regular job plus as much overtime as he could manage. With so much on his plate, Mr. Zubic was not able to finish the house as quickly as he would have liked. It meant his family lived uncomfortably for several months in a construction zone but, used to hardship, they persevered.

[5]      In February 2000, Mr. Zubic received a letter from the City of Windsor warning him that, contrary to the municipal bylaws, he was occupying a residence that had not yet had its final inspection. He scrambled to get the house up to code and an inspection was done sometime in March 2000. Still believing that he was not eligible to apply for his GST rebate until two years following the final inspection, Mr. Zubic patiently waited until March 2002 whereupon he promptly filed his application. The Minister received his application on April 2, 2002.

[6]      Mr. Zubic was a credible witness. In spite of being a newcomer to the English language, the relative complexity of the legislative provisions and the numerous pressures on him at the time, he exercised due diligence in his efforts to ascertain and to comply with what was required of him to claim the GST rebate. On the evidence presented, I am satisfied that but for his exchange with the Taxation Office officials, Mr. Zubic would have applied for the rebate early in 1997, well within the time permitted by the Act. It was only after his discussions with the officials that he (wrongly) concluded he could not apply at that time. His having made his application in March 2002 is entirely consistent with his understanding of what he had been told at the Taxation Office.

[7]      Unfortunately, although I accept his evidence as to how his mistaken belief came about, this does not help Mr. Zubic against the clear wording of subsection 256(3). Whether the information Mr. Zubic received from the officials at the Windsor Taxation Office was blatantly incorrect or merely left him with a wrong interpretation, the case law is clear that a GST representative cannot change the effect of the legislation[1].     Pursuant to the legislation, Mr. Zubic's deadline for filing the application was February 1999, two years after he and his family occupied the house. There is no question that Mr. Zubic applied well after that time. Counsel for the Respondent argued, quite rightly, that because Mr. Zubic failed to file his application within the time permitted under subsection 256(3), the Minister was prohibited by the clear wording of the legislation from paying the rebate to Mr. Zubic: "a rebate ... shall not be paid ...". The use of the words "shall not" deprives both the Minister and this Court of any discretion to extend the time for filing, even where the circumstances, as in the present case, call out for such an extension to be granted[2]. Accordingly, there is nothing in the provisions of the Excise Tax Act that permits the Minister to pay the GST rebate to Mr. Zubic after the statutory time period.

[8]      The only other avenue that may be open to Mr. Zubic is to seek relief under paragraph 23 of the Financial Administration Act[3]. In Didkowski v. The Queen[4], the Court was unable to allow the appeal because the Appellant had not filed his application for the GST rebate in time. Reflecting on the unfairness of the position in which this left the Appellant and his wife, Mr. Justice McArthur raised with the Appellant and his counsel the possibility of seeking a Remission Order[5]. It was not clear at this hearing whether, in Mr. Zubic's various dealings with officials, anyone had explored this alternative with him. It seems to me that in this sort of case, where language difficulties have resulted in such needless hardship, departmental officials may wish to discuss this possibility with Mr. Zubic. In any event, it is not for this Court to consider whether Mr. Zubic should seek or would be successful in obtaining a Remission Order. My decision must be based on the provisions of the Act as they are now. On the evidence presented and a proper interpretation of the statute, I can only conclude that the Act does not permit the Minister to pay the GST rebate to Mr. Zubic when his application was made after the time set out in subsection 256(3) of the Act. Accordingly, the appeal is dismissed.

Signed at Ottawa, Canada, this 22nd day of September, 2004.

Sheridan, J.