Citation: 2013 TCC 307
Date: 20130930
Docket: 2012-3741(GST)I
BETWEEN:
GUS NAPOLI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Paris J.
[1]
This is an appeal from
the denial of the GST/HST New Housing Rebate (“New Housing Rebate”) claimed by
the appellant in respect of the purchase of a newly constructed house located
at 33 Tanager Crescent, Wasaga Beach, Ontario.
[2]
The rebate was denied
on the basis that, at the time of purchase: i) the appellant did not intend to
use the property as his primary place of residence or as the primary place of
residence of someone related to him; and ii) neither the appellant nor anyone
related to him was the first person to occupy the property as a place of
residence. These conditions for the New Housing Rebate are set out in
paragraphs 254(2)(b) and (g) of the Excise Tax Act. (“ETA”)
[3]
The appellant and his
spouse entered into the agreement of purchase and sale for the property with
the builder on October 13, 2007. The closing date for the purchase was October
31, 2007.
[4]
On October 26, 2007,
the appellant and his spouse entered into an agreement to rent the property to
Ms. Natalie King for a one-year term. The agreement provided that the tenancy
was to commence November 15, 2007. Ms. King was not related to the appellant.
[5]
According to the
statement of adjustments for the purchase of the property, the transaction
closed on October 31, 2007. On that date the appellant and his spouse completed
and signed a number of documents relating to the New Housing Rebate, including
the New Housing Rebate application form, an assignment of the New Housing Rebate
to the builder and a statutory declaration. On the New Housing Rebate application
form, the box indicating that the house was the primary place of residence of
the applicant or of a relation of the applicant was ticked. In the statutory
declaration the appellant and his spouse stated that they were purchasing the
property as a primary place of residence for themselves or for a relative.
[6]
According to the
testimony of both the appellant and his spouse, when they entered into the
agreement to purchase the property on October 13, 2007, it was their intention that
the appellant’s spouse’s elderly parents would live in it as their primary
residence. At the time, her parents were residing in their own home and two of
their adult children were living with them. The appellant’s spouse testified
that difficulties had arisen with respect to her parents’ living arrangements
and said that she and her spouse wished to help her parents by providing a
place for them to live away from their two adult children. Both the appellant
and her spouse appeared to be sincere in relating the details of this
situation, and I accept that at the time the agreement of purchase and sale was
signed, they intended that her parents would live there.
[7]
However, the appellant
and his spouse also testified that her parents were ambivalent about the plan
from the start. The appellant and his spouse testified that, for that reason, they
decided to rent out the property as a “back-up plan.” The appellant’s spouse
indicated that even after the tenancy agreement was entered into on October 26,
2007, she was still hoping to convince her parents to move in. She and the
appellant said that her parents stayed at the house on a couple of occasions
after they took possession on October 31, 2007 and before November 17, 2007
when the tenant moved in.
[8]
I do not accept that
the appellant and his spouse were still intending to have her parents occupy
the property after they entered into the tenancy agreement with Ms. King. I
also find it highly unlikely that the appellant’s spouse’s parents would spend
some nights at the property between October 31 and November 17, 2007 while work
was still being done by the builder on the property to correct deficiencies.
Furthermore, Ms. King, the tenant, said that when she moved in, she could see
no sign that anyone had used the property or lived in it. Finally, it makes no
sense to me that the appellant’s spouse’s parents would spend time in the
property after the decision to rent the property had been made. Even if I had
accepted that they did sleep at the property on occasion before the tenant
moved in, the evidence falls far short of showing that those overnight stays
amount to occupying the property as their residence.
[9]
I also note that the
appellant did not call either of his spouses’ parents to testify at the
hearing. While the appellant’s spouse said that her mother had problems with
her knees and her father had health problems, there was no request to adjourn the
hearing to allow them to attend and no convincing evidence to show that they
were prevented by health problems from attending. I draw a negative inference
from the appellant’s failure to call either of them as a witnesses.
[10]
As for the suggestion by
the appellant’s representative that the appellant and his spouse occupied the
property as a place of residence after they took possession, I note that the
appellant testified that after each occasion on which they visited the property
between October 31 and November 17 (to hang curtains, install a dishwasher and
do various small jobs) they returned home each night.
[11]
For these reasons, I
find that neither the appellant’s spouse’s parents nor the appellant and his
spouse occupied the property as a place of residence after October 31,
2007 and before the tenant moved in on November 17, 2007. This is fatal to the
appellant’s claim for a New Housing Rebate since clause (i)(A) of paragraph 254(2)(g)
of the ETA requires that the applicant or a relation of the applicant be
the first individual to occupy the unit as a place of residence after
substantial completion of the unit.
[12]
The appellant’s
representative submitted in the alternative that if the appellant is denied the
New Housing Rebate, he should be allowed to claim a GST/HST New Residential
Rental Property Rebate (“Rental Property Rebate”) in respect of the property
because he met all of the conditions for that rebate.
[13]
However, as pointed out
by counsel for the respondent, the deadline for applying for a Rental Property
Rebate is two years after the end of the month in which GST first became
payable on the purchase. This deadline is found in paragraph 256.2(7)(a)
of the ETA.
[14]
Since GST became
payable on the purchase of the property on the closing date, October 31, 2007,
the time limit for applying for a rental property rebate would have been
October 31, 2009. The appellant only filed a Rental Property Rebate application
in 2011 after the Minister denied his New Housing Rebate claim.
[15]
I have no jurisdiction
to waive or extend the time limit set out in paragraph 256.2(7)(a).
Therefore,
I have no power to order the Minister to allow the appellant’s Rental Property
Rebate application.
[16]
The
appellant stated that other taxpayers who purchased property from the same builder
and who claimed the New Housing Rebate but who rented out their properties were
allowed by the CRA to file the Rental Property Rebate applications in place of
their New Housing Rebate applications, and were in fact granted those rebates.
[17]
Again,
I agree with counsel for the respondent that I cannot take into account the
CRA’s treatment of those other taxpayers. I am required to apply the provisions
of the ETA to the facts of this case, and as I have indicated, the
application by the appellant for the rental property rebate was out of time.
[18]
This
is a harsh result for the appellant, and I am sympathetic to his position.
However, I must dismiss the appeal.
Signed at Ottawa, Canada, this 30th day of September 2013.
“B.Paris”
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