Date: 19980717
Docket: 97-956-GST-I
BETWEEN:
JOHN A. BURROWS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Hamlyn, J.T.C.C.
[1] This is the Appellant’s appeal with respect to Goods
and Services Tax (“GST”) under the Excise Tax
Act (the “Act”), Notice of Reassessment
number 960790492129P 7, dated July 18, 1996, regarding an
application for rebate of GST.
[2] By Notice of Assessment the Minister of National Revenue
(the “Minister”) disallowed the Appellant’s GST
New Housing Rebate application in the amount of $3,526.79 for a
house in Portland, Ontario.
FACTS
[3] In disallowing the Appellant’s GST New Housing
Rebate application, the Minister made the following assumptions
of fact:
(a) the house located at Lot 26, Concession 3, Township of
North Burgess, Ontario, designated as Parts 11 and 14 of Plan
27R2762, for which the Appellant claimed a New Housing Rebate,
was not constructed for use as the primary place of residence of
the Appellant;
(b) the house used as the primary place of residence of the
Appellant was located at 904-160 George Street, Ottawa, Ontario;
and
(c) both the Appellant and his spouse are employed in
Ottawa.
[4] According to the Appellant, the Portland residence is his
primary residence and he views the apartment in Ottawa as a
transient location. He submits that he purchased the Ottawa
residence in order to eliminate the commute from Portland. The
unit in question was chosen due to its proximity to the
Appellant’s work place. He submits that the transitional
nature of this residence is evidenced by the fact that three
other residences have been occupied by the Appellant while he has
owned the Portland residence and that he intends to dispose of
the Ottawa apartment upon retirement. The Appellant further
submits the fact that he pays higher property tax for the
Portland residence supports his submission that this house is his
primary place of residence.
ISSUE
[5] Is the Appellant entitled to a rebate pursuant to section
256 of the Act. In particular, did the Appellant construct
the Portland residence for use as the primary place of residence
as required by paragraph 256(2)(a) of the Act?
SIGNIFICANT EVIDENCE
[6] The Appellant states his intention was that the Portland
residence was to be and is his primary residence.
[7] The Appellant further states he and his wife spent more
hourly time at the Portland residence than the Ottawa residence.
However, in terms of days, more time was spent at the Ottawa
residence than at the Portland residence. He emphasizes that his
records, such as his driver’s licence and his income tax
returns show his address as the Portland residence. The Appellant
asserts that the value of his Portland residence exceeds the
value of his Ottawa residence and that this factor is important
to him in determining his primary residence.
[8] On cross-examination, he admitted that bank statements and
insurance policy notices, T-5’s and charitable donations
were sent to his Ottawa address.
[9] For income tax purposes, in 1994, the Appellant elected to
treat the Portland property as a deemed disposition in order to
utilize the expiring capital gains exemption. For income tax
purposes, for that taxation year, the Portland residence was not
treated, as the term is defined, as a principal residence under
the Income Tax Act.
[10] The evidence from a witness called by the Respondent (the
Building official for the municipality where the Portland
residence was located) indicated that at the time the building
permit was obtained for the Portland residence, the property was
zoned seasonal residential and on that basis a permit was issued
for pre-construction of a cottage. The zoning by-law has now been
changed to allow “limited service residential”. The
municipal official also stated no occupancy permit was granted to
the Appellant for this property.
ANALYSIS
[11] Subsection 256(2) provides a GST rebate for owner-built
homes. Under this subsection, if an individual constructs a
single unit residential complex for use as the primary place of
residence of that individual, then subject to certain conditions
he or she is entitled to a rebate of GST.
256.(2) Rebate for owner-built homes - Where
(a) a particular individual constructs or substantially
renovates, or engages another person to construct or
substantially renovate for the particular individual, a single
unit residential complex for use as the primary place of
residence of the particular individual or a relation of the
particular individual,
...
the Minister shall, subject to subsection (3), pay a rebate to
the particular individual equal to
...[1]
[12] The policy underlying this provision is to extend a
rebate to those individuals purchasing a new house under a
specific dollar value. Hence, it is aimed at ensuring that
individuals can purchase affordable housing. Consequently, the
rebate is restricted to a single dwelling which is the primary
place of residence of the individual, rather than to secondary
houses such as cottages and summer homes. At issue, is whether or
not the Portland residence is the Appellant’s
“primary place of residence” as required by paragraph
256(2)(a).
[13] The Minister’s position on the meaning of
“primary place of residence” is found in GST
Memorandum 500-4-5, Housing and Other Property Rebates
in which it states:
“primary place of residence” means a residential
unit, owned jointly or otherwise, which is intended to be
inhabited by an individual on a permanent basis. Only one
residence may be a person's primary residence. For rebate
purposes, if a person has more than one place of residence, the
following factors are taken into consideration to determine if
the residence qualifies as the primary residence: whether the
individual intends to use the home as his or her primary
residence, the length of time the premises are inhabited, and the
designation of that address on personal records.
[14] The Minister’s Policy Paper P-130 entitled Place
of residence, elaborates upon the Minister’s position
on the meaning of the term “primary place of
residence”. The Policy Paper points out that while a person
may have more than one place of residence, he may only have one
“primary place of residence”. When determining the
primary place of residence, the Paper indicates that
consideration should be given to the purpose of the stay, the
amount of time of the stay and the physical presence at the
residence.
[15] The Act does not define the phrase “for use
as the primary place of residence” or the term
“primary place of residence”. The Oxford Shorter
English Dictionary defines “primary” and
“residence” as:[2]
Primary. 2. Of the first importance; principal, chief.
Residence. 3. The place where a person resides; his
dwelling-place; the abode of a person.
[16] In this case, the Appellant treats his Portland residence
as the property of first importance.
[17] His chief residence from his own resolve and the place he
intends as his primary residence is the Portland residence. He
treats his Ottawa residence as transitory and intends it to be
the subject of a sale when his work career ceases in the
foreseeable future.
[18] There is a mix of addresses showing both properties as
the primary place of residence.
[19] The lack of compliance with municipal laws affecting
zoning and occupancy must be weighed with the other factors.
However, it is to be observed from the evidence before the Court
that the zoning by-laws appear to be honoured in the breach.
[20] While it is clear from the evidence in any given year, he
spends more days in Ottawa, I consider perhaps the days of
occupancy as opposed to the hours of occupancy more realistic
when considering the length of time the property is inhabited.
However, in the Appellant’s definition hours is more
important.
[21] On balance, the intention of the Appellant is that
Portland is his primary place of residency and his life’s
focus in terms of residency is the Portland residence.
CONCLUSION
[22] On that basis and in the absence of any other legislative
dictates, I conclude the Appellant’s primary place of
residence for the period in question was his Portland
residence.
DECISION
[23] The appeal from the assessment made under the Excise
Tax Act, notice of which is dated July 18, 1996, and bears
number 960790492129P 7 is allowed and the assessment is
referred back to the Minister for reconsideration and
reassessment on the basis that the Appellant’s Portland
residence was his “primary residence” for the
purposes of the Appellant’s application for New Housing
Rebate.
Signed at Ottawa, Canada, this 17th day of July 1998.
“D. Hamlyn”
J.T.C.C.
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