REASONS
FOR JUDGMENT
Boyle J.
[1]
This appeal under the Court’s informal procedure
is in respect of Mr. Parthiban’s claim for a GST/HST new housing rebate
for his new family home in Markham, Ontario.
Overview
[2]
The hearing focused on two issues: (i) the new
housing rebate requirement in paragraph 254(2)(b) of the Excise Tax
Act that when the Appellant bought the home in December 2011 it was to use
the home as his and his family’s primary place of residence, and (ii) the
related requirement in paragraph 254(2)(g) that the Appellant and his
family were the first persons to occupy the home as a place of residence after
closing the purchase in December 2012.
[3]
The Respondent was satisfied at the hearing that
all of the evidence was that the Appellant, his wife and their young children
have occupied the home throughout, and that the only other person to occupy the
home is the Appellant’s wife’s brother who has lived with, and as part of, the
family throughout the relevant time.
[4]
The Court was therefore left to resolve only the
first issue, whether in December 2011 when he entered into the agreement of
purchase and sale for the home, Mr. Parthiban intended to use it as his
family’s primary place of residence.
[5]
Following the conclusion of the evidence, the
Respondent rightly also agreed that all of the evidence indicated that he
bought the home intending to use it as his family’s only place of residence,
and that it has been used as such ever since they bought it through to today.
The home has never been offered for sale nor for rent, and has never been left
vacant.
[6]
The Appellant’s new housing rebate application
was turned down because, per the Canada Revenue Agency (the “CRA”) letter
turning down the rebate request, “for rebate purposes,
your house in Canada can only be considered a secondary place of residence
since your status while in Canada is a visitor”.
[7]
The CRA notice of confirmation disallowing the
Appellant’s objection similarly concludes that the Markham home is a secondary
residence because the Appellant continues to reside in the United Kingdom.
[8]
This is the position that was maintained at the
hearing notwithstanding the evidence.
[9]
The Respondent’s position is wrong. The
legislation is clear that the Appellant’s right to the rebate turns on the
characterization of the house as a place of residence, not his status as a
resident or non‑resident. This is also clear from the CRA’s own
publications on the new housing rebate, including the Technical Interpretation
issued to the Appellant at the time he was buying the house. It appears that CRA
employees at the review and objection stages sought to read the words to deny
the Appellant’s rebate because they believed he and his wife were not lawful
immigrants or residents. This case was not helped by the fact that the
Department of Justice assigned the Tax Court hearing to an immigration lawyer.
The Facts
[10]
The Appellant, his wife and his brother‑in‑law
each testified. Their testimony was consistent throughout.
[11]
The Appellant and his wife are U.K. citizens and
passport holders who moved to Canada in 2011. Their three children have been
born since 2011 in Canada, the oldest being born in late 2011.
[12]
Before moving to Canada, the Appellant and his
wife sold their U.K. home and placed all of their personal possessions in
storage. Their stored items were shipped to Canada after they arrived.
[13]
Once they arrived in Canada, they bought a car
and the Appellant obtained an Ontario driver’s licence.
[14]
The Appellant and his wife had owned and
operated a convenience store business in leased premises in the U.K. Before
moving to Canada, they arranged for a local manager of the store’s day‑to‑day
business. They have continued to own the business. This, combined with the
Appellant’s other sources of income from his internet‑ and Skype‑based
software engineering consulting self‑employment activities, has provided
enough income for the family while they are living in Canada these past six
years.
[15]
The Appellant occasionally travelled outside
Canada for family visits and for holidays, at times with his wife or with his
wife and their children. These ranged from a one‑week holiday in Jamaica
to a few weeks to a month primarily in the U.K. visiting family and in Sri
Lanka to attend a sick parent. The evidence is that the longest absence from
Canada was perhaps as long as a month‑and‑a‑half altogether.
I find that the Appellant and his family were in Canada, as a typical family
would be, in their Markham home for between 10 and 10‑and‑a‑half
months each year since the December 2012 closing on their Markham home.
[16]
When they would visit family in the U.K., they
would normally, if not always, stay at a sibling’s home or that of another
member of their extended family. It is clear that there is not one scintilla of
evidence or even a hint of a suggestion that the Appellant or his wife at any
time owned, leased or otherwise had available to them another place of
residence anywhere in the world.
The Law
[17]
The statutory requirements for the new housing
rebate to be occupied by the buyer as a residence for himself or their family
are as follows under the Excise Tax Act:
|
254(2) Where
|
254(2) Le ministre verse un
remboursement à un particulier dans le cas où, à la fois :
|
|
. . .
|
[…]
|
|
(b) at the time the
particular individual becomes liable or assumes liability under an agreement
of purchase and sale of the complex or unit entered into between the builder
and the particular individual, the particular individual is acquiring the
complex or unit for use as the primary place of residence of the
particular individual or a relation of the particular individual,
|
b)
au moment où le particulier devient responsable ou assume une responsabilité
aux termes du contrat de vente de l’immeuble ou du logement conclu entre le
constructeur et le particulier, celui-ci acquiert l’immeuble ou le
logement pour qu’il lui serve de lieu de résidence habituelle ou serve
ainsi à son proche;
|
|
. . . and
|
[…]
|
|
(g) either
|
g)
selon le cas :
|
|
(i) the first individual to
occupy the complex or unit as a place of residence at any time after
substantial completion of the construction or renovation is
|
(i) le premier particulier à
occuper l’immeuble ou le logement à titre résidentiel, à un moment après
que les travaux sont achevés en grande partie, est :
|
|
(A) in the case of a single unit
residential complex, the particular individual or a relation of the
particular individual, and
. . .
|
(A) dans le cas de l’immeuble, le
particulier ou son proche,
[…]
|
|
the Minister shall . . .
pay a rebate to the particular individual . . .
|
|
|
|
[Emphasis added.]
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[18]
It is clear from the statutory language that the
requirement to be satisfied for a new housing rebate is whether the housing
unit was occupied as a place of residence. That is very distinct from
either the buyer’s residence status in Canada for income tax law purposes,
which is a characterization of the person’s status, or whether the buyer
is lawfully present or resident in Canada for immigration law purposes, which
addresses the status and rights of the person. The new housing rebate
legislation requires me to characterize the home as a place of residence or
not, not the person who owns the home. Clearly a person cannot be a “place of
residence” or a “lieu de résidence”.
[19]
It should also be noted that in the French
version the words for “primary place of residence”
are “lieu de résidence habituelle”. The use of
the word “habituelle” in French imports no concept of ranking, ordination or
numbering that might be associated with certain normal uses of the word
“primary” in English. The French makes it even more clear and certain that the
use of the word “primary” to qualify “place of residence” in English is not to
suggest that the new housing rebate is only available to those who also have at
least a second home also used as a place of residence.
[20]
The requirement that the house be a primary
place of residence is only in paragraph 254(2)(b) and not in (g).
That is, it is only a requirement that, at the time of agreeing to buy it, the
house was to be used as a primary place of residence. The words “primary” and “habituelle”
do not appear in paragraph (g).
Analysis
[21]
As noted above, the CRA letter denying the
rebate application turns it down on the basis that the Appellant’s house in
Canada can only be considered as a secondary place of residence since his
status while in Canada when he agreed to buy it and when he moved in was that
of a visitor. The CRA letter continues immediately by referring as support for
this to the discussion of “primary place of residence/lieu de résidence
habituelle” in the CRA GST/HST New Housing Rebate Guide RC4028.
[22]
In the December 2012 closing, the Appellant
requested a ruling on this issue from CRA’s GST/HST Rulings Group in Ottawa. In
January 2013, he received a Technical Interpretation in response. It reads:
The “primary
place of residence” of an individual is generally the residence that the
individual inhabits on a permanent basis. Only one residence may be a person’s
primary place of residence at any one time. If a person has more than one place
of residence, the following are some of the factors that are taken into
consideration when determining if the residence qualifies as the primary
one . . . .
This is entirely consistent with the
legislation and does not confuse a building as a place of residence with the
owner’s country of residence.
The Technical Interpretation also correctly informs the Appellant that “[w]hether or not the purchaser is a non‑resident
has no bearing on the eligibility of the new housing rebate or its assignment
to the builder”.
[23]
The Respondent confirmed in argument that on the
evidence the Markham home was purchased with the sole intention of using it as
the family’s place of residence and that it has always only ever been used as
that. However, the Respondent maintained its position that this house, which
was their sole place of residence, could not be their primary place of
residence for new housing rebate purposes if the Appellant and his wife did not
have lawful residence status in Canada in December 2011 that would allow them
to remain in Canada until they closed the purchase in December 2012. That their
first son was a Canadian citizen born in October or November 2012 and moved
into their new home with them in December 2012 unfortunately did not help
because he had not yet been conceived in December 2011 when the agreement to
purchase the home was entered into.
[24]
In December 2011 the Appellant and his wife
fully intended to have a family. They had tried without ultimate success for
some time before their first son was born. The evidence is entirely clear that
they were buying this home intending to use it as the sole place of residence
for them and their children that they were intending, indeed trying hard, to
have. Since their first child was a Canadian citizen who was native born in
Canada and to which there were no immigration issues, I am not sure why there
could remain a problem after December 2012.
[25]
I frankly cannot see how a home in Markham that
is occupied by a family as their only place of residence, without so much of a
hint in the evidence of the possibility of another home being another place of
residence, could be characterized as their secondary place of residence or as
anything other than their primary place of residence. If I am the only person
to own a house, I am its sole owner and I am not a co‑owner. If a law
turned on whether I was its primary owner, arguably that law could be
interpreted by some as implicitly only applying in the case of co‑ownerships
in which there are at least two unequal co‑owners. However, in the case
of the new housing rebate I cannot conclude that the use of the word “primary
place of residence” requires that an appellant have more than one home as a
place of residence before he can be said to have a home that is a primary place
of residence. If I am the only one who writes a test, even I fail, I know I
will place first and, even if I ace it, I know I will place last, but I cannot,
under any circumstances, place second or anywhere else. If I am the only one
who runs a race, I will place first and be the winner even if I finish seconds
before the maximum time allowed, and, even though I also placed last, I cannot
place second.
[26]
How can a family’s only place of residence be
its secondary place of residence? How can it be anything other than its primary
place of residence? It is that family’s sole place of residence 100% of the
time. If it is not this family’s primary place of residence for the reasons
given by the CRA and the Department of Justice, very few Canadians will ever get
the new housing rebate. Only those who have more than one home. Enough said.
[27]
How does the CRA in Summerside and Scarborough
read the CRA Policy Statement, Guide and Technical Interpretation written by
CRA headquarters in Ottawa?
[28]
The Respondent may have its doubts, suspicions
and concerns, as may this Court, but this is a court of law and its legal
decisions are based on evidence. Neither the law nor the evidence support the
Respondent’s position.
[29]
The immigration status of the Appellant and his
wife as non‑citizens of Canada is simply not relevant for new housing
rebate purposes. I acknowledge that with respect to the testimony of the
Appellant there may be credibility and weight issues regarding testimony in
which he speaks carefully about his immigration status. This is not surprising
for someone in these circumstances. However, it is not relevant to the facts I
need to determine nor the law I need to apply.
[30]
The incontrovertible evidence is that the
taxpayer and his wife arrived in Canada in 2011 and presented their U.K.
passports which were stamped for admission and that they understood this allowed
them to remain in Canada for six months. The Appellant and his wife believed
that they could leave Canada for a period of time before the six‑month
period expired, and then return and present their U.K. passports, and again
have them stamped and be allowed a further six‑month stay. I do not know
that their understanding is wrong as I was not presented with any law to the
contrary. The Appellant had his wife’s passport for the relevant time and his
current passport presented to the Court and to the Respondent. According to the
Appellant, they were never challenged or denied entry, nor the subject of any
removal order or any other action. This worked for the Appellant and his wife.
The evidence is that they were never asked upon re‑entry when they last
visited Canada. After several years, they both sought to regularize their
immigration status in Canada with a view to becoming permanent residents and/or
landed immigrants. The Appellant has a study visa application pending and has a
valid visitor record issued by Citizenship and Immigration Canada allowing him
to remain as a visitor until the end of this calendar year. His wife has a work permit
application pending and also has an appropriate visitor record allowing her to
be in Canada, but not work in Canada. Their visitor records were put in
evidence.
[31]
Whether or not the Appellant and his wife were
correct in their understanding that they were entitled to remain another six
months as visitors in Canada after leaving Canada for a period of one week or
more, the evidence is clear that in fact this worked for them. There is no
evidence suggesting the contrary.
I do not know whether or not the Appellant’s interpretation or understanding
was correct as the Respondent has not referred me to any law in support of its
explanation, but it was the Respondent’s view that a U.K. passport holder was
only entitled to remain in Canada no more than 182.5 days out of any 365‑day
period. Indeed the Respondent was not certain that that was a legal requirement
and was not set out in a policy guide of Citizenship and Immigration Canada.
[32]
My ability to characterize the house as having
been intended to be used as their primary place of residence at the time they
first agreed to buy it turns on whether the Appellant and his family intended
to use that house as a place of residence. It does not turn on whether the
Appellant or his family could have been the subject of a removal order, arrest,
deportation, or even a rendering to a foreign facility. It turns on whether the
family in fact intended to and did occupy the house as the family’s place of
residence. It is also not a requirement that the family’s intention to use the
house as their primary place of residence in December 2011 have been a smart,
risk‑free, sensible, plan for their family; it merely has to have been
their intended use. It is not relevant to their new housing rebate entitlement
that their plan to reside effectively year‑round in Canada as visitors for
a period of time which included the closing date on the house may have been
risky given that they may not have been as successful as they might have
expected in regularizing their personal immigration status if questioned or
challenged. It does not matter that the risks associated with their
understanding and plan were so great that the Respondent or individuals working
for the Respondent might not be comfortable if it were them; it is not about them.
It is this particular Appellant and his family whose intended use I am to
assess and there is zero doubt that they intended to acquire their Markham home
as their sole place of residence and that they have used it as that ever since
they closed on it, notwithstanding that their immigration compliance may have
been sketchy or that their immigration status may have made their intended use
of the home a risky plan to be able to conclude smoothly. In fact, on the
evidence they were able to conclude it. They closed on the house when it was
built and moved in immediately.
Conclusion
[33]
The Appellant’s appeal is allowed as his
purchase of the Markham home satisfies the requirements of the new housing
rebate. The CRA will be ordered to reassess accordingly. I am awarding fixed
total costs of $250 in favour of the successful Appellant in this informal appeal.
Signed at Ottawa, Canada, this 2nd day of March 2017.
“Patrick Boyle”
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