REASONS
FOR JUDGMENT
Russell J.
[1]
The following constitutes my reasons for
judgment in the appeal brought by Mr. Azfar Ahmad in respect of the assessment
raised against him February 20, 2014 by the Minister of National Revenue
(Minister) under the federal Excise Tax Act (Act). That assessment is
evidenced by a notice of (re)assessment showing date of February 20, 2014.
[2]
A copy of this notice of (re)assessment is
attached to the notice of appeal as filed. The assessment denied the Appellant’s
application for a Goods and Services Tax/Harmonized Sales Tax (GST/HST) New Housing
Rebate (NHR) of $26,883, showing the assessed amount of $28,329 as owing. Also,
seemingly appealed is an assessment dated April 27, 2016 raised by the Minister
under the Act, denying a March 8, 2016 application by the Appellant for a
GST/HST New Residential Rental Property Rebate (NRRPR). The notice of
(re)assessment, also attached to the notice of appeal, showing that date
indicates an assessed balance owing (described as “prior balance”) of $28,221.
[3]
Also in the first paragraph of the notice of
appeal is stated, seemingly as an alternative ground of appeal, that the appeal
is:
...or from the suspension, pursuant to subsection 188.2(2) of the Income
Tax Act, of its authority to issue an official receipt referred to in Part
XXXV of the Income Tax Regulations.
[4]
At paragraph 12 of the notice of appeal the
Appellant cites subsection 296(2.1) of the Act as a further argument supporting
his appeal.
[5]
Mr. Ahmad (Appellant) represented himself in
this informal procedure matter.
[6]
With respect to the first stated issue, being
appeal of the denial of the NHR by way of the February 20, 2014 assessment, the
Appellant on May 1, 2015 filed a notice of objection in respect thereof, which
was accepted as timely filed. On March 17, 2016 the Minister confirmed the
objected-to assessment. Then on June 13, 2016 the notice of appeal
commencing the herein appeal was filed.
[7]
However, also the Appellant on March 8, 2016
filed an application for a NRRPR in respect of the same property. The Minister
denied the application per assessment raised April 27, 2016. No notice
of objection has been filed in respect of this assessment. It appears by virtue
of the notice of appeal that the Appellant wishes to appeal this assessment as
well.
[8]
The notice of appeal indicates that the
Appellant considers the subject property should be entitled to one or the other
of these two rebates. In this regard the notice of appeal states:
This case is
about assigning the file to the most appropriate GST rebate allowance as per
the rule of law. The amount outstanding needs to be set-off either by allowing
the new residential rebate or the new rental rebate.
[9]
The basic underlying facts of the matter are as
follow. In February 2011 the Appellant and his brother entered into an
agreement to purchase a residential property in Mississauga, a condominium to
be constructed. Their intention at that time was that each would live in this
property. About two years later construction of the condominium property was
finalized and the brothers’ purchase/sale transaction respecting the property
closed February 21, 2013. But in the very latter portion of this two year
interim period following their February 2011 agreement to purchase the property
the two brothers, both young men, each had had his life turn in a different
direction. The Appellant now was moving to Saskatoon for employment there. The
brother now was headed to Pakistan for schooling. No longer would either of
them be remaining in the Toronto area so as to live in the new property in
Mississauga.
[10]
With this late development in or about early
2013, the brothers decided to try to sell the property. This effort initially
was unsuccessful, due at least in part to oversupply of condominium units in
the market. So the brothers chose to try to rent the property, while continuing
to seek to sell it. The property accordingly was rented promptly upon
completion of construction, firstly to an individual not related to either of
the brothers. Eventually, more than three years later, the condominium finally
was sold.
[11]
The builder/seller of the property submitted on
behalf of the Appellant the NHR application, received by the Minister on March
28, 2013. The Appellant’s signature is on this document. As stated, this
application was denied by assessment raised February 20, 2014. Per the
Respondent’s Reply, the application was denied on the basis that neither the
Appellant nor his brother nor any qualifying relation of either was the first
to occupy the property following substantial completion of its construction,
nor was it sold without any individual having resided in the property in the
interim.
[12]
The February 20, 2014 assessment was shortly
preceded by a letter dated February 14, 2014 to the Appellant from the relevant
Canada Revenue Agency (CRA) auditor Stanley Wells, advising that the February
20, 2014 notice of (re)assessment denying the NHR application would shortly
follow.
[13]
The letter also stated:
As discussed, information is available on
our website regarding the GST/HST New Residential Rental Property Rebate. The
applicable publication and form numbers are RC4231 and GST524.
[14]
Furthermore, the notice of (re)assessment
itself, dated February 20, 2014, stated in part:
...- your claim
relates to a rental property. You may be eligible for a New Residential Rental
Property rebate. File your claim for this type of rebate on Form GST524.
[15]
The Minister thus had determined that the NHR
application did not abide by the above-noted paragraph 254(2)(g) of the Act,
which requires either that the individual being the claimant or a relation must
be the first person to occupy the property as a place of residence; or that the
individual made an exempt supply of the property by way of sale, with ownership
transferred without in the interim any individual having resided in the
property.
[16]
The Appellant filed a notice of objection to the
February 20, 2014 assessment more than a year later - May 1, 2015. But he did
not then, despite the cues in the February 14, 2014 letter from the auditor and
also in the February 20, 2014 notice of (re)assessment, apply for a
NRRPR.
[17]
The objected-to assessment re the denied NHR was
confirmed March 17, 2016.
[18]
Several days prior to this, the Appellant then
had proceeded to submit a NRRPR application regarding the Mississauga property.
Just over a month later, the Minister denied that application; this conveyed by
a notice of (re)assessment dated April 27, 2016 which included the statement
that the NRRPR had been denied because:
… we did not receive the application within two years of the date
tax became payable on purchase…as set out in the [Act].
[19]
At no time did the Appellant file a notice of
objection to that April 27, 2016 assessment, or file an application
to extend time to file a notice of objection to that assessment. Rather, as
recounted above, on June 13, 2016 the Appellant proceeded with filing in this
Court the notice of appeal commencing the herein appeal.
[20]
The Appellant states that he was delayed in
pursuing matters at the pre-notice of appeal stage by what the Appellant
considers were irrelevant matters raised by Mr. Wells, the CRA auditor.
[21]
The parties’ respective positions have been set
out above. The Appellant states that it is entitled to one or other of the two
specified types of GST/HST rebates. The Respondent says that the Appellant is
entitled to neither rebate - the NHR does not apply per paragraphs
254(2)(b) and (g) noted above, and the NRRPR does not apply as the Appellant
transgressed paragraph 256.2(7)(a) of the Act in not having applied for that
rebate within two years following when first the tax sought to be rebated
became payable.
[22]
The issue is whether the Appellant has qualified
for either of these two rebates.
[23]
On the evidence I accept the Appellant’s
testimony that when he and his brother in February 2011 signed the agreement to
purchase the Mississauga property, they both had the bona fide intention
of residing in that condominium property upon construction completion. Accordingly
I reject the Respondent’s claim that the Appellant does not meet the
requirement per paragraph 254(2)(b) of the Act which in the context of
this case requires that the property have been acquired for the purpose of
using it as the primary place of residence of the Appellant and/or his brother.
[24]
As noted, paragraph 254(2)(g) requires that the
Appellant or a relation have been the first to occupy the new premises as a
residence, upon construction completion. It is clear that that did not occur
here. The brothers both had altered their career plans during the almost two
year period prior to completion of construction of the condominium property in
Mississauga they had agreed to buy. Neither after-all was going to remain in
the Toronto area so as to be able to reside in the property upon construction
completion. The evidence is straightforward and un-equivocating on this point.
[25]
On this basis I find that the Minister was
correct in denying the Applicant’s application, received March 28, 2013, for
the NHR.
[26]
In connection at least with the NHR, the
Respondent presented at the hearing a further argument that there was no
amending agreement to move the brothers’ father off the purchase and sale
agreement and the two brothers on. The Respondent cited section 67 of the Financial
Administration Act (Canada) and Assignment of Crown Debt Regulations (Canada),
section 13 submit the right to the NHR could not be transferred from father to
sons absent the amending agreement. The Appellant asserted that there had been
an amending agreement to deal with that.
[27]
In any event this legal argument raised by the
Respondent does not at all appear in the Respondent’s Reply in this informal
proceeding, nor is there any reference to the above two legislative provisions
in the Reply. Therefore, in fairness to the self-represented Appellant who had
no notice of this argument from the Respondent’s pleadings, I decline to
entertain the submission.
[28]
Regarding the NRRPR, as noted above this was
denied by the Minister’s assessment raised April 27, 2016 on the basis the
application had been submitted beyond the legislated two year window for same. Thereafter,
the Appellant simply commenced this appeal in this Court, without at all having
filed a notice of objection pertaining to the NRRPR denial.
[29]
The upshot of this is that the herein appeal of
the April 27, 2016 assessment must be denied. It is basic that a person cannot
proceed to appeal an assessment in this Court absent a notice of objection to
that assessment previously having been filed - see subsections 301(1.1) and
303(1) of the Act, as pleaded in the Respondent’s Reply.
[30]
The Appellant pleads that he should be entitled
to one at least of these two rebates. Leaving aside for the moment the matter
of subsection 296(2.1), discussed below, there are legislated conditions
precedent for each of these two rebates that have to be met before a rebate
application can be granted by the Minister. The Minister has no discretion in
this regard. If the legislated pre-conditions are met the rebate must be
allowed. If not all of the legislated pre-conditions are met then the Minister
must deny the application. The same is true of this Court, and is fundamental
to this Court’s responsibility to interpret and apply the law, whether on an
appeal that leads to this Court agreeing with or over-ruling the Minister’s
decision-making on the point(s) appealed.
[31]
Also, the Appellant as noted above seemingly has
pleaded that alternatively he is appealing:
... from the
suspension, pursuant to subsection 188.2(2) of the Income Tax Act, of
its authority to issue an official receipt referred to in Part XXXV of the Income
Tax Regulations.
[32]
With respect, this provision addresses
charitable gift receipts, and thus has no connection or relevance to the case
at bar.
[33]
I turn now to subsection 296(2.1) of the Act,
pleaded by the Appellant. Subsection 296(2.1) provides:
(2.1) Where, in
assessing the net tax of a person for a reporting period of the person or an
amount (in this subsection referred to as the “overdue amount”) that became
payable by a person under this Part, the Minister determines that
(a) an amount (in this
subsection referred to as the “allowable rebate”) would have been payable to
the person as a rebate if it had been claimed in an application under this Part
filed on the particular day that is
(i) if the assessment is in respect of net tax for the reporting
period, the day on or before which the return under Division V for the period
was required to be filed, or
(ii) if the assessment is in respect of an overdue amount, the day
on which the overdue amount became payable by the person,
and, where the rebate is in respect of an amount that is being
assessed, if the person had paid or remitted that amount,
(b) the allowable
rebate was not claimed by the person in an application filed before the day
notice of the assessment is sent to the person, and
(c) the allowable
rebate would be payable to the person if it were claimed in an application
under this Part filed on the day notice of the assessment is sent to the person
or would be disallowed if it were claimed in that application only because the
period for claiming the allowable rebate expired before that day,
the Minister
shall apply all or part of the allowable rebate against that net tax or overdue
amount as if the person had, on the particular day, paid or remitted the amount
so applied on account of that net tax or overdue amount.
[34]
The Appellant submits that this provision allows
the granting to him of the NRRPR notwithstanding he had subsequently late filed
an application for same.
[35]
Subsection 296(2.1) is legislatively headed “Allowance
of unclaimed rebate”. My colleague, Paris, J. has succinctly described this
provision in paragraph 10 of his reasons for judgment in A OK Payday Loans
Inc v Her Majesty, 2010 TCC 469, as follows:
Subsection
296(2.1) requires that the Minister, when assessing net tax for a reporting
period or assessing for an amount due under Part IX of the Act, to take into
account a rebate to which a person is entitled under Part IX but which has not
yet been claimed by the person, and to apply the amount of the rebate against
net tax or against the amount owing. Paragraph 296(2.1)(c) provides that the
Minister shall apply the amount of the rebate against the net tax or amount
owing even if the period for applying the rebate has expired.
[36]
More specifically, subsection 296(2.1) requires,
to be applicable in the Appellant’s context:
A.that the Minister have
assessed an amount, referred to as the “overdue amount” that became payable
under Part IX of the Act;
B. that in so doing the Minister determines that an amount, referred to
as the “allowable rebate” would have been payable to the person as a rebate if
it had been claimed in an application under Part IX, and that application had
been filed on the day the overdue amount became payable by the person;
C.where the rebate is in respect
of an amount being assessed, if the person had paid or remitted that amount,
the allowable rebate was not claimed by the person in an application filed
before the day the notice of assessment is sent; and
D.the allowable rebate would
have been payable to the person if claimed in an application under Part IX on
the day the notice of assessment is sent to that person or it would have been
disallowed only for the reason that the period for claiming the allowable
rebate had already expired.
[37]
In respect of the foregoing statutory criteria,
in my view the Minister did raise an assessment for an overdue amount payable
under Part IX, being an amount of unpaid GST/HST due upon the February
2013 substantial completion of the new residential premises. The assessment is the
February 20, 2014 assessment which denied the NHR and as well assessed the
amount of GST/HST overdue in respect of the subject residential premises, being
the amount that would have been lessened had the NHR been assessed as applicable.
[38]
I do not think that in assessing on February 20,
2014 the Minister did determine, per subsection 296(2.1), as to whether
an allowable rebate - in particular the NRRPR which had not at that time been
applied for - would have been payable to the Appellant as a rebate under Part
IX if it had been applied for. There is specific suggestion, however, that the
Minister did have in mind that the Appellant could qualify for the (at that
time) unapplied-for NRRPR. I refer to the above-cited references appearing in
the February 20, 2014 notice of (re)assessment itself and in the slightly
earlier February 14, 2014 letter from the CRA auditor, which references suggest
to the Appellant that he submit an application for the NRRPR. At that time the
filing of a NRRPR application by the Appellant would not have been beyond the
legislated two year deadline for so doing, counting from February 2013 when the
residential had been substantially completed.
[39]
I consider it possible if not likely that the
Minister at the time of the February 20, 2014 assessment and during the audit
leading up to that assessment considered that the Appellant could well qualify
for the NRRPR and sought relevant information, such as would be included in an
application for a NRRPR, to confirm whether he did so qualify.
[40]
However, despite the Minister’s suggestions in
the February 14, 2014 letter and the February 20, 2014 notice of (re)assessment
itself that an NRRPR application be submitted, the Appellant did not then do
so.
[41]
When, two years later, the Appellant did file an
NRRPR application (shortly prior to confirmation by the Minister of the
February 20, 2014 assessment herein appealed), that application was rejected
for having been filed beyond the two year legislated deadline for so doing.
[42]
The matter of whether the Appellant would
qualify for an NRRPR was not argued before me and accordingly I am unable to
express any finding on this point. But I do consider that that question is, per
subsection 296(2.1), a matter for the Minister to “determine” as part of the
assessment of February 20, 2014, which assessment is under appeal herein. The
Minister would have at hand information from the auditor’s February 2014 and
earlier discussions with the Appellant and now also as set out in the 2016
NRRPR application, to consider in so determining. Certainly the Minister had
encouraged the Appellant in February 2014 when the NPR application was
denied to submit a NRRPR application; signalling that the Minister considered
that the Appellant might well qualify for that rebate.
[43]
In my view having the Minister now make a
subsection 296(2.1) determination as to “allowable rebate” would be in the
nature of redressing the February 20, 2014 assessment, which is the assessment
currently before this Court. The opening words of subsection 296(2.1) refer to
the Minister determining (“determines”), “[w]here, in
assessing…an amount that became payable by a person under this Part…”
Note that the determining to be done by the Minister is statutorily expressed
as being an element of the assessment itself.
[44]
Also, in my view having the Minister now
“determine” is consistent with the several requirements of subsection 296(2.1),
noting that the actual NRRPR application was filed well after when the subject
tax became due and overdue in February 2013, and well after the raising of the
pertinent assessment, being the February 20, 2014 assessment.
[45]
In the Appellant’s notice of appeal subsection
296(2.1) was prominently pleaded and set out in full in paragraph 12 and
referenced also in paragraphs A and 21 thereof.
[46]
However, the Respondent’s Reply there was scan
response – simply an identical generic statement in each of subparagraphs 9(h)
and 9(n) that the Appellant’s pleadings that referenced and set out subsection
296(2.1),
… consist of
argument and matters of an administrative nature, and that there are no further
facts to admit, deny or state no knowledge of, but to the extent that there are
any such facts, they are denied.
[47]
In short, little of a coherent response re
this provision was pleaded by the Respondent, leaving the Appellant without
notice as to the Respondent’s position, if one.
[48]
The Respondent cited Napoli v Her Majesty,
2013 TCC 307, which had a certain factual similarity to the case at bar.
However, subsection 296(2.1) was not even mentioned in the reasons for
judgment, let alone discussed or applied.
[49]
The Respondent also cited A OK Payday Loans
Inc (supra). In that case however the appellant was seeking rebate
of mistakenly remitted GST for services that were exempt from GST. This Court, per
Paris J., found that subsection 296(2.1) could not apply as the pertinent
assessment in that case was not, as subsection 296(2.1) requires, either in
respect of net tax owed for a reporting period or for an amount payable under
the Act. Since no tax was owing to begin with, the assessment did not reflect
any amount payable under the Act. Rather, it simply dealt with denial of the
claim for rebate on the basis it was out of time. In the case at bar however
there is an amount of HST/GST payable, assessed February 20, 2014 as overdue.
[50]
In conclusion I will allow this informal
procedure appeal, for the purpose of referring the appealed February 20, 2014
assessment back to the Minister for reconsideration and reassessment, whereby
in so reconsidering the Minister “determines” per subsection 296(2.1) of
the Act whether for the Appellant the GST/HST New Residential Rental Property
Rebate is an “allowable rebate”, and as such is payable to the Appellant per
that statutory provision.
Signed at Prince George, British Columbia, this 29th day
of September 2017.
“B. Russell”
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