Great Land – Tax Court of Canada finds that condos were supplied when they were conditionally agreed to be built

Prior to the October 30, 2007 announcement of the GST rate reduction from 6% to 5%, a builder agreed with numerous buyers to sell them (on a GST-included basis) condo units in a project that had not yet received site plan approval or a building permit. The transitional provision indicated that the reduced rate applied inter alia “to any supply … made on or after January 1, 2008.”

In concluding that there were supplies of real property under the agreements that occurred prior to 2008, so that the 6% rate applied, D’Arcy J. found:

• That there was a supply at the time each agreement was entered into on general principles given that such agreement gave the buyer a conditional right to acquire a specific (albeit, so far, non-existent) condo and: “This was the provision of something and thus constituted a supply.”
• In any event, ETA s. 133 (which, in approximate terms, deems supplies of property to occur when the agreement for their supply is entered into) deemed the agreements to be supplies of the condos, with D’Arcy J. noting in this regard that “[t]he application of section 133 is also not contingent on the existence of the Condo Units at the time the parties entered into the … Agreements … .”

He also accepted the Crown’s alternative argument that the appellant had in fact collected GST at the 6% rate (and thus, would have been required to remit tax at that rate under the s. 225(1) formula, which included "all other amounts collected by the person … on account of tax,” even if the 5% rate applied under the transitional rule), noting that the 6% rate was referenced in the statements of adjustments at the closings, and that the buyers claimed the new housing rebates on the basis of a 6% rate.

CRA had incorrectly computed the GST as being 6/106 of the agreed consideration for the purchase plus the new housing rebate amount that was assigned by the buyer to the appellant, rather than only 6/106 of the agreed consideration – but this did not matter since this erroneous tax was, in fact, collected and, therefore, was required to be remitted.

Neal Armstrong. Summaries of Great Land (Olive) Inc. v. The Queen, 2022 TCC 56 under ETA s. 133 and s. 225(1) – A(a).