2137691 Ontario v. Park – Ontario Superior Court finds that the residential complex HST exemption applied to the sale of a portion of a large home
The land for a large home in Oakville was divided by a corporation into three lots, so that the middle lot contained a pool house and hallway structure that connected to the rest of the home on the other two lots. The corporation then sold this middle lot to an individual purchaser coupled with a covenant that it would demolish this structure – which, however, it did not do until 45 days after closing. The sales contract provided that any HST was in addition to the sales price of $2.8M, but the vendor (the corporation) provided a statutory declaration that the property qualified for exemption as being used residential accommodation, so that no HST was collected on closing. A year later, it then brought a motion to recover HST from the purchaser.
After making the questionable statement that “the time of the supply is the time that the deal closes” (ETA s. 133 was not to be taken literally), Coats J found that the sale was exempt, stating:
[A]t the time of closing, the residence and pool structure were a complete structure which were suitable for living in. … It was clearly an appurtenance to the detached home.
… There is no requirement in ETA that the residential complex/residential unit exemption involve the transfer of an entire residential unit or a complete residency unit. This would be contrary to the “part thereof” language in section 123(1) … .
She went on to indicate that even if the sale had been subject to HST, ETA s. 194 would preclude the vendor from now charging such HST to the purchaser, as the purchaser’s reliance on the exemption certificate was not unreasonable.