Universo Home – Tax Court of Canada finds that a backdated declaration of trust did not preclude a finding that a company was the beneficial owner of a new home construction

CRA denied the ability of a home builder (“Universo Home”) to claim a GST new home rebate purportedly assigned to it pursuant to ETA s. 254(4) on the basis that Universo Home had no interest in the property at the time the home was constructed and, therefore, did not qualify as its “builder.” The difficulty centered on the fact that the 2011 purchase and 2013 sale documentation named the wife (Mrs. Dhesi) of the sole shareholder (Mr. Dhesi) of Universo Home as the purchaser and vendor of the property, and the fact that Declaration of Trust, which named Mrs. Dhesi as the nominee for Universo Homes, was found by Bocock J to have not been signed until sometime before (perhaps, shortly before) the closing of the 2013 sale.

Bocock J nonetheless found that Universo Home was the beneficial owner for some period prior to the sale, partly on the basis that it paid for the construction work and reported the property as an asset for financial statement purposes. Accordingly, it qualified as a builder for rebate purposes.

Bocock J also intimated in obiter that even if Universo Home had not acquired beneficial ownership, it still would have qualified as having an “interest” in the property (which was all that the “builder” definition required) by virtue of potential builder’s liens on the property for the construction work that it had performed.

Neal Armstrong. Summary of Universo Home Construction Ltd. v. The Queen, 2019 TCC 87 under ETA s. 254(4).