[OFFICIAL ENGLISH TRANSLATION]
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Citation: 2004TCC310
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Date: 20040420
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Docket: 2003-581(GST)I
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BETWEEN:
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JEAN-CLAUDE BISSONNET,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Lamarre Proulx, J.
[1] This is an appeal under the
informal procedure concerning an assessment, notice of which is
numbered 012750025239G0001 and dated November 20, 2001.
[2] The issue is whether the
application for the new housing rebate in the amount set out in
section 256 of the Excise Tax Act (the "Act") was filed
within the time limit prescribed in subsection 256(3) of the
Act.
[3] The rebate amount claimed is
$1,241.59.
[4] Subsection 256(3) of the Act
reads as follows:
Application for rebate. - A rebate under this section
in respect of a residential complex shall not be paid to an
individual unless the individual files an application for the
rebate within two years after the earliest of
(a) the day
that is two years after the day the complex is first occupied as
described in subparagraph (2)(d)(i),
(a.1) the day ownership is
transferred as described in subparagraph (2)(d)(ii);
and
(b) the day
construction or substantial renovation of the complex is
substantially completed.
[5] Subparagraph 256(2)(d)(i)
reads as follows:
256(2) Rebate for owner-built homes. - Where
...
(d)
either
(i)
the first individual to occupy the complex after the construction
or substantial renovation is begun is the particular individual
or a relation of the particular individual, or
...
the Minister shall, subject to subsection (3), pay a rebate to
the particular individual ...
[6] In the case of an owner-built
home, there are two relevant days for the calculation of the
two-year time limit for filing an application for rebate. The
first day is two years after the day the complex is first
occupied and the second day is the day construction or
substantial renovation of the complex is substantially completed.
The application for rebate must be filed within two years after
the earliest of those two days.
[7] The facts on which the Minister of
National Revenue (the "Minister") relied to make the assessment
are described in paragraph 10 of the Reply to Notice of Appeal
amended as follows:
[translation]
(a) the facts
admitted above;
(b) the Appellant is
an individual who constructed a residential complex for use as
his primary place of residence;
(c) that residential
complex is a residential complex, that is, a "single unit
residential complex" as defined in subsection 123(1) of the
E.T.A.;
(d) on or around
December 31, 1995, the construction of the residential complex
was substantially completed;
(e) on or around
September 10, 1999, the Appellant occupied the residential
complex;
(f) on August
20, 2001, the Appellant filed a GST/HST New Housing Rebate
Application with the Minister;
(g) the Appellant
had until December 31, 1997, to file a GST/HST New Housing Rebate
Application with the Minister;
(h) the Appellant is
not entitled to the GST rebate claimed because the application
was filed with the Minister out of time.
[8] The Appellant testified. He stated
that the house, on the date of the hearing, was not yet
substantially completed.
[9] In that regard, he filed a series
of photos of his current house as well as cost estimates for the
materials necessary for the completion of his house.
[10] The photos of the interior of the house
were filed as Exhibit A-1, those of the exterior as Exhibit A-2
and the estimates as Exhibit A-3.
[11] Counsel for the Respondent then
informed the Court that the photos of the current state of the
house had not been shown to him in advance nor had the estimates
for the work to be done.
[12] The Appellant stated that the flooring
had not been laid down, the stairs were not finished and the
doors had not been installed.
[13] As for the exterior, the aluminum
cladding had not been installed and the soffit had not been
installed.
[14] Photo A-4 shows that when the house was
first occupied, the kitchen cupboards had not been installed.
Those cupboards, according to an invoice included in Exhibit A-3,
cost $4,600 plus taxes. A photocopy of a cheque for $5,291.15 is
also included in that Exhibit. The bathroom cabinets were not
installed either.
[15] The Appellant is a farmer. He lived in
a mobile home on his land 15 feet in front of the new house. He
began construction on his house in November 1992. He constructed
the parts that he could on his own. His brother helped him on
occasion.
[16] Marcelle Lemay Damien, a tax
audit technician, testified. Her report and the invoices were
filed as Exhibit I-2. The following is the conclusion drawn in
her report:
[translation]
Based on the analysis the JVs, the house was completed in
1995. The facts submitted after 1995, namely, 96-97-98-99-01 are
minimal and unimportant.
Application denied, out of time. Mr. Bissonnet disagrees and
will appeal.
[17] The Court asked the Appellant to
explain why the project had taken so long. He filed as Exhibit
A-5 a handwritten document, dated February 15, 2002, that he
attached to his notice of appeal. Without reproducing the facts
described therein, I can say that from September 1993 to the
spring of 2001, the Appellant experienced dramatic events and
serious illnesses that explain the surprising duration of the
work.
[18] When the family moved into the house,
according to the Appellant, it was habitable but very far from
being completed.
[19] Counsel for the Respondent referred to
the following decisions of this Court: Tessier v. The
Queen, 2001 GTC 105; Vallières v. The
Queen, 2001 GTC 545; Pickering v. The
Queen, 2001 GTC 463; and Meechan v. The
Queen, 2000 GTC 712. I cite paragraphs 15 to 19 of the
English version of Vallières, supra:
15 The term
"substantially completed", as it appears in paragraph
256(3)(b) of the Act, is not specifically defined in the
legislation.
16 The 90% threshold
test is used by the CCRA as an administrative rule of thumb.
However, this test is very imprecise and has consistently been
criticized. There is a complete absence of criteria on which to
base such an estimate. Ostensibly, the CCRA may consider
"substantially complete" to mean something less than
90%. However, it is unlikely that a level of completion below 70%
would amount to "substantial completion" as envisaged
by the Act.
17 The 90% or more
rules must always be qualified by the fact that the purchaser
must be able to reasonably inhabit the premises. To a large
extent, that can have a subjective component and one has to take
into account the particular purchaser, but not to the point where
objective standards can be disregarded.
18 To be
"substantially completed" a residential complex must be
capable of being used for the purpose for which it was
constructed.
19 In determining
what constitutes "substantial completion" there must be
a certain common-sense assessment of what, on the facts of the
particular case, a reasonable person would regard as substantial
completion.
[20] It is my opinion that the Appellant's
estimation that the house was not yet substantially completed is
quite acceptable. According to the description of the state of
the construction given by the Appellant, supported by recent
photos and estimates, based on common sense, the house was not
substantially completed. Although it is surprising that the
construction took so long, the taxpayer has explained
himself.
[21] Invoices can usually be indicative but
this is not an absolute criterion. The state of the construction
done on the house is paramount.
[22] The calculation of the two-year time
limit must therefore commence as of two years after September 10,
1999, the day the Appellant occupied the residential complex. As
the Appellant filed his application for rebate on August 20,
2001, he was within the prescribed time limit.
[23] Consequently, the appeal is
allowed.
Signed at Ottawa, Canada, this 20th day of April, 2004.
Lamarre Proulx, J.
Certified true translation
Manon Boucher
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