St-Joseph – Quebec Court of Appeal finds that the transformation of 2 floors of commercial building to residential use did not qualify as a “termination” of commercial activity for QST purposes

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:

[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 … .

Neal Armstrong. Summary of St-Joseph Immobilier inc. v. Agence du revenu du Québec, 2025 QCCA 745 under ETA s. 141.1(3)(a).