9158-9853 Québec – Court of Quebec finds that incurring 90% of construction costs did not equate to “substantial completion” of an apartment building for QST self-supply purposes

The appellant (“9158”), which had constructed a 14-storey apartment building, took the position that its self-supply of the building occurred in an earlier reporting period, when 90% of the construction costs had been incurred (a reporting period which was now statute-barred), rather than during a subsequent reporting period, which the ARQ had treated as the proper time for self-assessment. Under QSTA s. 225 (similarly to ETA s. 191(3)), 9158 was required to self-assess QST on the FMV of the building at the later of the time that the construction of the building was “substantially completed” and the time that the first tenant moved in.

Lareau JCQ accepted the ARQ evidence that, even after 9158’s mooted substantial completion date, “35 out of 88 units were not ready for rental” and “a significant portion of the underground parking garage was used to store materials and equipment such as, for example, bathroom vanities [and] kitchen countertops.” In dismissing 9158’s appeal, he stated:

Although the rule of thumb of 90% of the costs incurred may be appropriate in the vast majority of cases, for formulating, without further effort, an equivalence between a specific percentage of costs incurred and the concept of a "substantially completed" building, this does not seem justified under these circumstances.

Neal Armstrong. Summary of 9158-9853 Québec Inc. v. Agence du revenu du Québec, 2022 QCCQ 9851 under ETA s. 191(3).