Donald Adams v. Minister of National Revenue, [1987] 2 CTC 2017, 87 DTC 363

Brulé, T.C.J.:—The present appeal is from the Minister’s reassessment of the 1983 taxation year by which he disallowed the appellant's Registered Home Ownership Savings Plan ("R.H.O.S.P.") top-up deduction in the amount of $9,000 on the basis that the appellant had not acquired an "owner-occupied home" within the meaning of the Income Tax Act (the "Act").

Facts

For the 1983 taxation year, the appellant claimed a $9,000 deduction from his income in respect of a contribution to his R.H.O.S.P. He withdrew the funds from his R.H.O.S.P. in October 1983 and used these funds in the construction of a house on a piece of land registered in his girlfriend's name. In addition to the funds from his R.H.O.S.P. the appellant also contributed other funds, his time and physical labour to the construction of the house. In January 1984, the appellant and his girlfriend moved into the house and were later married. The Minister disallowed the appellant's deduction in respect of his contribution to his R.H.O.S.P. on the basis that the appellant had not acquired an "owner-occupied home" within the pre- scibed time.

Issue

The issue in the present case is whether the appellant was the "owner" of the home he moved into in January 1984, for the purposes of paragraph 146.2(1)(f) of the Act, as it then was, defining "owner-occupied home".

Analysis

Subsection 146.2(4) of the Income Tax Act normally allowed a taxpayer a maximum annual deduction of $1,000 in respect of a R.H.O.S.P. However, for the 1983 taxation year this deduction could be increased to $10,000 minus the contribution to the plan made in previous taxation years if the taxpayer who met the conditions prescribed by the Act, withdrew all the funds from his plan and used these to acquire a "owner-occupied home" within 60 days of the end of the year. Paragraph 146.2(1 )(f) of the Act defined "owner-occupied home" as follows:

“owner-occupied home" of a taxpayer means a housing unit or a share of the capital stock of a cooperative housing corporation owned, whether jointly with another person or otherwise, in a taxation year or within 60 days after the end of the year by the taxpayer, if the housing unit was, or if the share was acquired for the sole purpose of acquiring the right to inhabit a housing unit owned by the corporation that was, inhabited by the taxpayer at any time in the year or within 60 days after the end of the year and was situated in Canada;

The Act offers no indication of whether the definition of "owner-occupied home" refers exclusively to legal ownership or whether the definition extends to equitable ownership of the home.

Common law property principles shed little light on the question. In their book The Law of Real Property* [1] the authors comment at page 108:

Although the person with the best ascertained right to possession is often called the “absolute owner," it is clear from the foregoing analysis that English law knows no abstract ownership, as opposed to the right to recover possession, unless perhaps the Crown's universal seignorial rights should so be classified.

Interpretation Bulletin number IT-437, dealing with the concept of ownership for the purposes of section 146.2 of the Act, states however at paragraph 2:

The terms "ownership" or "own" in the Income Tax Act should be given the meaning of “beneficial ownership" and “beneficially own" respectively in the sense that these terms are used in the common law jurisdictions which recognize two forms of ownership — legal and beneficial.

Paragraph 11 of the same bulletin further states:

A taxpayer who has an interest as a part owner of property is considered to own the property for the purposes of section 146.2 and paragraph 54(g) whether such ownership is legally recognized as a joint tenancy, tenancy in common, partnership or any other relationship.

With respect to the probative value of such documents, when construing ambiguous statutes, I would quote the words of Taylor, T.C.J. in a case also dealing with section 146.2 of the Act, Hugh B. Lambe v. M.N.R., [1985] 1 C.T.C. 2170 at 2174; 85 D.T.C. 161 at 165:

I do not expect that Information Circulars, or Interpretation Bulletins, should displace the law, but it is readily acknowledged where there is ambiguity or uncertainty, and if the only clarity discernible seems to come from such sources, they should not be lightly discarded by the Court.

The Court is satisfied that paragraph 146.2(1) of the Act did not refer exclusively to the legal owner of the home. Although the appellant was not the legal owner, the evidence adduced has clearly established that the appellant had an interest as owner in the home he paid for in part and helped build. The exact extent and nature of the appellant’s ownership interest in the home need not be determined at this time, suffice it to say that this interest qualified him as owner of the home for the purposes of paragraph 146.2(1)(f) of the Act.

For these reasons, the appeal is allowed and the matter referred back to the respondent for reconsideration and reassessment. The appellant is entitled to costs on a party and party basis.

Appeal allowed.