REASONS
FOR JUDGMENT
Boyle J.
[1]
This is an informal HST appeal by the Appellant
in respect of the denial by the Canada Revenue Agency of her claim for an HST
new housing rebate for a house on Gleave Terrace in Milton, Ontario.
[2]
Her entitlement to the new housing rebate turns
on the requirements of the HST legislation that:
1. she
purchased the house for use as the primary place of residence for herself or a
relative, and
2. the
first person to occupy the house as a place of residence was either herself or
a relative.
[3]
It is the Appellant’s position that she and her
husband agreed to purchase a new house to be built for them to occupy
themselves. It is her further position that when the financial and employment
circumstances of herself and her husband changed, they decided they had to sell
the new house by the time it was built but that her mother-in-law had moved
into the house in the interim.
[4]
The agreement to buy the house was dated October
2011 for a price of about $425,000. Closing on the house occurred on April 10,
2013. The house was listed for resale on April 21, 2013 for $517,000 as a “Brand New Never Lived in Home”. It was advertised on
HomeFinder.ca as a “Brand New Never Lived in Home”. The
house was sold for about $510,000 on June 9, 2013 and closed in August.
[5]
The Respondent challenged whether the Appellant
and her husband intended to live in the home when she agreed to buy it. The
Respondent’s doubts are grounded in the location of the house relative to where
they then lived and worked, and relative to where they in fact later bought a
different type and size and value of house into which they did move and reside
in, and on the cost of the house and servicing its mortgage and taxes and
utilities relative to their combined incomes and their previous rent.
[6]
The Respondent also challenged whether the
Appellant’s mother-in-law (or the Appellant or any other relative) ever
occupied the house as a place of residence.
[7]
The Appellant was the only witness at trial. I
did not hear from her mother-in-law about her moving into the house and
residing in it, from her sister‑in-law who helped with the down payment
for the house, nor from her husband who was originally intended to live
together with the Appellant in that house. Nor was I offered the listing
agent’s testimony, or even a letter from her, to corroborate that someone lived
in the house she described as never lived in.
[8]
The Appellant testified that her mother-in-law
moved into the house one or two weeks after they got possession and that they
listed two or three weeks after they got possession. Neither the Appellant nor
her agent brought any documents to Court to corroborate that the mother-in-law either
moved to or lived in the house. This was somewhat surprising since the
Respondent had pleaded that the house had been offered for resale as brand new
and never lived in. It was agreed that we would proceed to argument but
nonetheless allow the Appellant 30 days to submit additional supporting
documents such as a copy of the listing, the mortgage, property tax bill,
utility bills during the mother-in-law’s occupation, any mail sent or redirected
to her mother-in-law at that address, etc., and to allow the Respondent to
submit a copy of the Home Finder advertisement. Additional documents of this
nature have been received and reviewed.
[9]
The evidence in this case does not satisfy me on
the balance of probabilities that the Appellant’s mother-in-law ever moved into
or resided in the house.
[10]
My significant doubts about this arise from:
1. The
only reason given for the mother-in-law moving into and living in the house
once they took possession and during the period it was listed for sale was due
to construction issues. No detail was given. While it is possible things
remained to be done after closing to a single family freehold house, one might
expect that the work could more easily be accomplished without someone living
there, and that the buyer would have to sign off on the remaining contracted
work being done satisfactorily regardless of whether anyone was there to watch,
supervise or get in the way.
2. The
listing and the advertising both refer in unqualified terms to the fact that
the house was brand new and never lived in. It is hard to imagine how the
presence of someone living in the house could not be apparent to prospective
buyers looking at a brand new never lived in home. It is equally hard to
imagine a realtor taking such a risk.
3. I
did not hear anything from the mother-in-law or the real estate agent to
corroborate this, nor was I given any explanation for their absence. This
causes me significant doubt that their testimony, if given, would support the
Appellant.
4. The
Union Gas bill submitted shows an almost immaterial gas consumption. It was the
Appellant’s final bill. It was only the first page and did not detail what the
total charges were for — that is stated to be on page 2 which I was not given.
This does not satisfy me that any gas was consumed in April through August.
5. The
hydroelectric and water bills submitted were the initial and final bills. The
May bill was for $13 of electricity and recorded 0.00 cubic meters of daily water
use. The final bill showed $25 of electricity and again 0.00 cubic meters of
daily water consumption, which is about two gallons per day. That would only be
sufficient for two flushes of a high efficiency toilet and leave nothing for
bathing, showering, washing of dishes, etc.
6. There
were some inconsistencies in the testimony of the Appellant, in particular
involving the timing of her husband learning that his job might end relative to
their purchase and sale decisions.
[11]
In summary, it is entirely possible that the
Appellant’s mother-in-law did in fact move in and live in the house.
Unfortunately, the evidence before me simply does not allow me to conclude that
this is more likely than not what happened. For that reason, I am dismissing
the appeal.
[12]
I would observe that this result is consistent
with the fact that the Appellant was assessed income tax on the gain on the
house, and I conclude that she did not object to that income tax assessment.
The Appellant and her agent were given 30 days to produce a copy of a
notice of objection or similar document indicating the income tax treatment had
been objected to. None arrived.
Signed at Ottawa, Canada, this 9th day of November 2016.
“Patrick Boyle”
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