St-Joseph Immobilier inc. v. Agence du revenu du Québec, 2025 QCCA 745

Starting in 2002, St-Joseph incurred costs in converting the 1^st and 2^nd floors of a 12-storey mixed-use tower from commercial rental use into rental seniors’ residences (RSRs).

St-Joseph argued based on the QSTA equivalent of ETA s. 141.1(3)(a) that it had incurred the costs “in connection with the … termination of a commercial activity” of it, so that such costs were deemed to have been incurred in the course of its commercial activity. Thus, as noted in the Court of Appeal (at para. 4, TaxInterpretations translation) the effect of its argument was “to link the work undertaken to the termination of the previous commercial activity (commercial rental) rather than to the provision of the future activity (RSRs), which, not being a commercial activity within the meaning of the QSTA, would not give rise to ITRs."

In rejecting this position and before dismissing St-Joseph’s appeal, the Court stated (at paras. 4-5):

[Its] argument … fails to explain how the transformation aimed at a new activity is, in itself, related to the termination of the previous activity.

… [T]he expenses for the renovation and transformation into an RSR were not related to the termination of the commercial rental activity, and the judge's conclusion that they could not be linked to it is free of error.

St-Joseph incurred costs in converting the 1^st and 2^nd floors of a 12-storey mixed-use tower from commercial rental use into rental seniors’ residences (RSRs). It argued based on the QSTA equivalent of ETA s. 141.1(3)(a) that it had incurred the costs “in connection with the … termination of a commercial activity” of it, so that such costs were deemed to have been incurred in the course of its commercial activity, thereby entitling it to input tax refunds under the Quebec equivalent of ETA s. 169(1) – B(c).

In rejecting this position and before dismissing St-Joseph’s appeal, the Court stated (at paras. 4-5):

[Its] argument … fails to explain how the transformation aimed at a new activity is, in itself, related to the termination of the previous activity.

… [T]he expenses for the renovation and transformation into an RSR were not related to the termination of the commercial rental activity … .