Grands Palais du nouveau Saint-Laurent Inc. v. Agence du revenu du Québec, 2020 QCCQ 281

The plaintiff (“Grands Palais”), which had constructed a condominium complex that included 363 condo units and 408 parking spots (each having a separate cadastral lot), received assignments from the condo unit purchasers of their entitlements to the Quebec new housing rebate, and paid corresponding rebates to them on their purchases. All but two of the purchasers of units also purchased one or more parking spots.

The ARQ assessed Grands Palais on the basis that the consideration paid by 93 of the purchasers for their “single unit residential complex” included the parking spot purchased by them at the same time (viewed by the ARQ under the “residential complex” definition as being “attributable to the unit and … reasonably necessary for the use and enjoyment of the unit”), so that such total consideration exceeded the maximum $300,000 permitted consideration for purposes of the new housing rebate (pursuant to s. 362.2 of the Quebec Sales Tax Act).

In affirming this ARQ position, Croteau, J.C.Q. stated (at paras. 61, 63, 65, TaxInterpretations translation):

[I]ndoor parking spaces are an integral part of the eight high-rise buildings that the Grand Palais has chosen to locate in an urban area that is not very suitable for parking a vehicle. There are 408 of them, and they exceed the total number of residential units held in divided co-ownership that make up the real estate project. …

The location of the various high-rise residential buildings and the advantages that indoor parking spaces can provide led 99.44% of purchasers to express their intention to acquire at least one parking space at the same time as their residential unit.

[A]lthough they constitute different cadastral lots, the cost of which was calculated separately in the deeds of sale, the interdependence and interconnection of the parking spaces to the residential units are such that they could not be considered, for the purposes of establishing the amount of the Rebate to which the purchasers were entitled, as separate components.

The Quebec new housing rebate is essentially the same as the ETA equivalent, except that entitlement to it is lost at a lower dollar level of total consideration for the “residential complex” that is purchased. Croteau, J.C.Q. found that the consideration paid by purchasers for new condo units in a complex also included the $25,000 they paid for an underground parking spot. In particular, she found that the parking spot was “attributable to the [condo] unit and … reasonably necessary for the use and enjoyment of the unit,” stating (at paras. 63, 65, TaxInterpretations translation) :

The location of the various high-rise residential buildings and the advantages that indoor parking spaces can provide led 99.44% of purchasers to express their intention to acquire at least one parking space at the same time as their residential unit.

[A]lthough they constitute different cadastral lots … the interdependence and interconnection of the parking spaces to the residential units are such that they could not be considered, for the purposes of establishing the amount of the Rebate to which the purchasers were entitled, as separate components.

Accordingly, for 93 of the purchases, the total consideration exceeded the dollar threshold, after taking the extra $25,000 into account.

Like ETA s. 254(6), the builder under the QSTA is not liable for the denied rebate (which has almost invariably been assigned to the builder in larger projects) except where it “knows or ought to know” that the individual purchaser is not eligible for the rebate. In finding that the builder could not escape liability on this ground, Croteau, J.C.Q. found that although the rebate form itself did not explain the point at all well, the builder should have been able to ascertain the CRA/ARQ position on the rebate in various published Bulletins.