Docket: 2006-2309(GST)I
BETWEEN:
GINETTE GAGNÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Appeal heard
on December 15, 2006, at Montréal, Quebec
Before: The Honourable Justice
Réal Favreau
Appearances:
|
For the Appellant:
|
The Appellant herself
|
|
For the Respondent:
|
Martine Bergeron
|
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under Part
IX of the Excise Tax Act, notice of which is dated
August 17, 2005, and bears the number 050610022239G0009, with respect
to the Goods and Services Tax, for the period ending January 1, 2005,
is allowed, without costs, and the assessment is referred back to the Minister
of National Revenue for reconsideration and reassessment on the basis that the
Appellant is entitled to the rebate of Goods and Services Tax in the amount of
$2,811.61.
Signed at Montréal, Canada, this 2nd day of
February 2007.
"Réal Favreau"
Translation certified
true
on this 6th day of
March 2008.
Brian McCordick,
Translator
Citation: 2007TCC175
Date: 20070202
Docket: 2006-2309(GST)I
BETWEEN:
GINETTE GAGNÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1] This is an appeal, under the informal
procedure, from the Respondent's decision to disallow a claim for a rebate of
Goods and Services Tax (GST) in the amount of $2,811.61, submitted on or about
February 21, 2005, following the construction of a new home by the
Appellant.
[2] The rebate claim
was based on subsection 256(2) of the Excise Tax Act ("the ETA"). There is no
doubt that the construction ended on or about January 1, 2005, nor is
there any doubt as to the amount of tax claimed, or as to the fact that the
claim was submitted within the two‑year time limit contemplated in
subsection 256(3) of the ETA.
[3] The Minister of
National Revenue ("the Minister") disallowed the GST rebate claim on
the ground that one of the conditions required by subsection 256(2) of the
ETA was not met because the
building was not used as the Appellant's primary place of residence.
[4] Subsection 256(2) of
the ETA reads, in relevant part:
Rebate
for owner-built homes
(2)
Where
(a) a particular individual constructs or
substantially renovates, or engages another person to construct or
substantially renovate for the particular individual, a residential complex
that is a single unit residential complex or a residential condominium unit 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 the amount determined by the
formula
. . .
[5] In making the
assessment, the Minister relied, inter alia, on the presumptions of fact
set out in paragraph 8 of the Reply to the Notice of Appeal:
[TRANSLATION]
(a) The construction
of the building in respect of which a new-home GST rebate was claimed ended on
or about January 1, 2005.
(b) A total of
$7,810.03 in GST was paid for the construction of the building.
(c) When the work
was completed and when the claim was made, the Appellant was still habitually
residing at 2925 Langelier Boulevard, Apt. 3, Montréal, as she
admitted during her discussions with the objections officer.
(d) When the work was completed and she
claimed the rebate, the Appellant still had a job in Montréal with no determinate retirement date.
(e) The Appellant
acknowledged that she did not intend to terminate her lease in Montréal in the
short term because her spouse was not retiring in the short term.
(f) There is no evidence that the new home
located at 136 Chemin Pilon in Rivière‑Rouge is the Appellant's primary
residence.
(g) The new home located at 136 Chemin Pilon
is at most a secondary residence for the Appellant and does not qualify for the
new-home GST rebate.
[6] The issue for
determination is whether the Appellant is entitled to a rebate of the GST that
she paid in connection with her self-built home project.
[7] In order to build a
house for her retirement, the Appellant acquired from her son, in July 2004, a
part of the land that he owned in Rivière‑Rouge. The construction
work was completed faster than expected, and the house became practically
habitable in January 2005.
[8] At that time, the
Appellant was an employee of the Commission scolaire de Montréal, and was on
secondment to the Collège du Vieux Montréal. She was eligible for retirement,
and she alleges in her Notice of Appeal that she had notified the Commission
scolaire de Montréal and the Collège du Vieux Montréal that she would soon be
resigning. Ultimately, she resigned from her position as printing facilities
manager at the Commission scolaire de Montréal on January 9, 2006.
[9] The Appellant was
living with her spouse at 2925 Langelier Boulevard, Apt. 3, Montréal,
Quebec H1N 3A4 and it was expected that he would find employment in
the Rivière‑Rouge area.
[10] The Appellant's
plans fell through because her spouse started to have health problems which
forced him to take sick leave and obtain treatment from specialists. The leave
began on April 7, 2005, and ended in mid‑September 2005.
[11] Since the
Appellant's spouse needed medical treatment from specialists, the Appellant
changed her plans and decided to delay her move to Rivière‑Rouge. She
asked the Collège du Vieux Montréal to extend her secondment, and this request
was approved on the condition that she agree to complete a new assignment.
[12] As a result, the Rivière‑Rouge
residence never became the Appellant's habitual residence, and can only become
her primary residence in June 2008, when she can retire.
[13] The investigation
revealed that the Appellant still resides at 2925 Langelier Boulevard in Montréal and that
she never gave notice to terminate her lease. In her testimony, the Appellant
explained that she had been living there for several years and got along well
with the landlord. In her view, the absence of notice to terminate the lease
would not have prevented her from moving to Rivière‑Rouge when she wanted
to do so.
[14] It was also shown
that the Appellant has neither a telephone nor a mailbox in Rivière‑Rouge
and that she still uses her Montréal address as her official address for her
driver's licence, tax returns and tax rebate applications.
[15] However, the
Appellant produced a copy of a letter dated October 27, 2005, to the Caisse
d’Économie de l’Éducation confirming that the hypothec which that credit union
granted to the Appellant was for the construction of her principal residence on
Chemin Pilon in Rivière‑Rouge (the letter mistakenly refers to the town
of L'Assomption instead of the town of Rivière‑Rouge).
[16] The sole issue is
whether the Appellant built the Rivière‑Rouge house for use as a primary
residence, as required by paragraph 256(2)(a) of the ETA.
[17] GST/HST Policy
Statement P-228, issued on March 30, 1999, sets out the guidelines
for determining a person's primary residence for the purposes of GST/QST
rebates for new housing. Under the heading "Intention", the statement
specifies as follows:
For GST/HST new housing rebate purposes,
the Act requires that the individual acquired, constructed or substantially
renovated the residential complex or co-op share for use of the complex or unit
as the primary place of residence of the individual or qualifying
relative. This requirement may be considered to be an "intention"
test.
Intentions can only be judged by outward
indicators, i.e. the presence or absence of physical actions and/or evidence. .
. . Where the individual or a qualifying relative does not actually use the
residential complex or residential unit as a primary place of residence,
absent an intervening frustrating event, it can generally be concluded that the
individual did not acquire, construct or substantially renovate the complex or
unit for that use. . . .
[18] In the instant case,
the Appellant's intention at the time that the house was built was established
by her testimony alone. In support of her claims, she refers to the letter from
the Caisse d’Économie de l’Éducation confirming that the hypothec was granted
to the Appellant for her principal residence, and to the fact that she was
eligible for retirement at the time and that her spouse's illness prevented her
from moving and using the building as an habitual residence. This was not
questioned by the Respondent on cross-examination and I have no reason to doubt
the Appellant's credibility.
[19] The Respondent did
not submit any case law, even though the question of intent was examined in Boucher
v. The Queen, [2002] G.S.T.C. 84 (T.C.C.) (informal procedure), where
Lamarre J. agreed that an event subsequent to the construction of the residence
prevented it from becoming the family's habitual and permanent residence. I
quote from paragraph 18 of the English version of the said decision:
[18] I do not think it can be said that the
Val-Bélair residence was a secondary residence. Moreover, it was offered for
sale in September 2000, as soon as the appellant found out that his wife would
not have a job in Québec. In my opinion, if his wife had found a job in Québec
in September 2000, the respondent would not have contested the new housing tax
(GST) rebate. The fact that his wife's efforts were unsuccessful in the Québec
area does not change the purpose for which the Val-Bélair residence was
constructed.
[20] As was the case in Boucher,
the Appellant was unable to live permanently and habitually in the Rivière‑Rouge
home because of an unforeseeable event that was subsequent to the construction
and was beyond her control. This event cannot have the effect of changing the
purpose for which the home in Rivière‑Rouge was constructed.
[21] For these reasons, I
am of the opinion that the Appellant meets the conditions set out in
subsection 256(2) of the ETA — more specifically, the condition
that requires that the Appellant built the home in Rivière‑Rouge for use
by herself and her spouse as a primary residence. Since this was the only point
in issue, the appeal is allowed, without costs, and the assessment is referred
back to the Minister for reconsideration and reassessment on the basis that the
Appellant is entitled to a GST rebate in the amount of $2,811.61.
"Réal Favreau"
Translation certified
true
on this 6th day of
March 2008.
Brian McCordick,
Translator
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