Section 133

Cases

Canada v. Cheema, 2018 FCA 45

s. 133 effectively deemed an acquisition of a future new home at the time of signing the purchase agreement

In order to satisfy lender requirements, the individual taxpayer (Mr. Cheema) persuaded a friend (Dr. Akbari) to jointly sign an agreement for the purchase of a new home. The Ontario new housing rebate rules required that each individual who becomes liable under the purchase agreement is acquiring the new house as the primary place of residence of that individual or a relation.

Stratas JA (speaking for the majority, with Webb JA dissenting) nonetheless found that Dr. Akbari’s co-signing of the purchase agreement precluded access to the rebate, stating that the fact that Dr. Akbari “had no beneficial interest in the property” was “irrelevant” (paras. 93-94) as what mattered was that Dr. Akbari became liable to the builder under the purchase agreement when he signed it.

This determination turned in part on the breadth of s. 133, which effectively deemed Dr. Akbari to have acquired the new home at the time of signing the agreement. Stratas JA stated (at paras. 100, 101, 102):

As Mr. Cheema and Dr. Akbari both signed the agreement of purchase and sale, they are deemed to receive a supply of the property at the time they entered into the agreement. …

Deeming provisions create legal fictions. They assume things to exist even when they do not in reality—like, for example, the supply of a home that is not yet constructed. …

Other elements found in the text, context and purpose of the statute support the interpretation that supply means the signing of an agreement of purchase and sale and not a transfer of beneficial ownership.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(b) third party who did not intend to occupy was liable at the purchase agreement time 335
Tax Topics - Statutory Interpretation - Ordinary Meaning Court should not depart from usual interpretation principles in seeking a sensible result 118
Tax Topics - Statutory Interpretation - Ease of Administration interpretation that favours administrative efficiency is to be favoured 190
Tax Topics - Excise Tax Act - Regulations - New Harmonized Value-Added Tax System Regulations, No. 2 - Section 40 co-purchaser with no intended beneficial interest was required to satisfy ETA s. 254(2) rules 165
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) "legal acquirer" rather than intended beneficial owner was the purchaser 213

Fedak v. R., [1999] GSTC 65

The Appellant bought a boat for $23,000, traded in a used boat for $6,000, but was charged GST on the full $23,000.

As the agreement to buy the new boat and trade in the old boat was entered into in March 1996, the new trade-in rules (in s. 153(4)), which applied to supplies "made" on or before April 24, 1996, did not apply, with the result that the Appellant was not entitled to claim a rebate with respect to the GST charged to him on the $6,000 of the purchase price.

Attorney General of Canada v. Metropolitan Toronto Hockey League, [1995] GSTC 31 (FCA)

Stone J.A., in disagreeing with a conclusion of the trial judge that the effect of s. 133 was to deem the provision of property under an agreement to be part of one supply and not separate supplies for purposes of paragraph 25(f) of Schedule V, Part VI as it had read, found that the "and" appearing at the end of s. 133(a) signified that (a) and (b) were to be read together. As so read, the section simply indicated that where in the circumstances described in s.(a) GST must be paid, the transaction will not be subject to GST at the time the property or service is actually provided.

See Also

2137691 Ontario Limited. v. Lucia Pessoa Park, 2018 ONSC 4218

supply of land occurred at the closing

The Plaintiff sold to the Defendant the middle lot of a three-lot property over which a home had spread. This middle lot contained a pool house and hallway structure that connected to the rest of the home on the other two lots. The sale agreement (“APS”) required that any existing structures be demolished by the vendor, but this did not occur until 45 days after closing.

After having described a submission of the plaintiff (who sought to recover HST on the sale) that referenced ETA s. 133, Coats J found that “the time of the supply is the time that the deal closes” (para. 57) and the “material time for the determination of whether the property was a ‘residential complex’ and ‘residential unit’ subject to an HST exemption is the time of closing” (para. 58).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Residential Complex exemption applied to the sale of a portion of a large home 352
Tax Topics - Excise Tax Act - Section 224 registrant could bring a motion for declaration that HST was owing to it without complying with s. 224 248
Tax Topics - Excise Tax Act - Section 194 purchaser entitled to rely on Statutory Declaration of the Vendor as to exempt status 326

Commissioner of Taxation v MBI Properties Pty Ltd, [2014] HCA 49

honouring of an executory contract entails a second supply

"South Steyne," which owned strata-titled apartments comprising the guest rooms of a hotel, leased each of those apartments to "Mirvac," and then sold three of those apartments to the respondent ("MBI"), which remained subject to the leases to Mirvac.

The High Court held that each apartment lease, as an executory contract, obliged MBI to give Mirvac use and occupation of the apartment throughout the term of the lease in consideration for the periodic payment of rent, so that MBI's observance of this continuing obligation was properly characterized as an intended supply of residential premises by way of lease by it to Mirvac which was input taxed under s 40-35 of the Australian GST legislation. The Court stated (at paras. 35, 38):

A transaction which involves a supplier entering into and performing an executory contract will in general involve the supplier making at least two supplies: a supply which occurs at the time of entering into the contract, in the form of both the creation of a contractual right to performance and the corresponding entering into of a contractual obligation to perform; and a supply which occurs at the time of contractual performance, even if contractual performance involves nothing more than the supplier observing a contractual obligation to refrain from taking some action or to tolerate some situation during a contractually defined period. …

Once the general operation of the GST Act is understood in that way, it is apparent that there is no warrant in the text or policy of the GST Act for reading the reference in the special rule in s 40-35 to a supply of "residential premises" that is a supply "by way of lease" as referring to the supply which occurs at the time of entering into the lease but not as referring to the further supply which occurs by means of the lessor observing and continuing to observe the express or implied covenant of quiet enjoyment under the lease. The reference encompasses both, and both are therefore input taxed.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply "supply" may not entail action 95

Administrative Policy

8 September 2017 Interpretation 180362

supply made when master sales agreement entered into
175518 is similar

S. 144 provides that “a supply of goods that have been imported … but have not been released [by the CBSA] before the goods are delivered … to the recipient of the supply, shall be deemed to be made outside Canada,” so that even if the vendor is a registrant, it is not required to charge GST/HST. CRA considered that s. 144 does not apply if the goods were supplied by the vendor before they were imported and, in this regard, applied s. 133, which deems goods to be supplied at the time that the sale agreement is entered into. Accordingly, in an example where a registered non-resident enters into a somewhat long-term agreement for the supply of fuel oil to Canco, and thereafter delivers the fuel oil to Canco at a Canadian port, CRA considered that s. 144 does not relieve the non-resident from the requirement to charge GST/HST notwithstanding that the fuel oil has not yet been released at the time of its delivery in Canada. In this regard, CRA stated:

Under section 133, the supply of the goods is deemed to be made when the agreement for the supply of the goods is entered into. … The relevance of the timing of when a supply is made under section 133 to the application of section 144 is reflected in the wording of the definition of "specified supply" of goods under subsection 178.8(1) … [which] distinguishes between a supply of goods that are imported after the supply is made, and a supply of goods that have been imported in circumstances in which section 144 deems the supply to have been made outside Canada. …

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 144 GST/HST exemption for supplies of goods before their release unavailable where sales agreement concluded before importation 277

Excise and GST/HST News – No. 96 under "University and public college meal plans" June 2015

assimilation of supply to agreement

Sched. V, Part III, s. 13 exempts the supply, under a meal plan that is for at least one month, by universities to their students of the right to receive at least 10 meals weekly throughout the meal plan period for a single consideration. CRA considers that these requirements are not breached if there are "top-ups," i.e., the addition of funds to the plan, and that:

The tax status of a supply… is to be determined at the time the student initially enters into the agreement with the supplier and will not be affected if, at the end of the plan period, unused funds are refunded or carried over for use in the future…[or] the plan is cancelled… and unused funds are refunded.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part III - Section 13 assimilation of supply to agreement 167

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 15. ("Carrying on Business")

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

An unregistered non-resident enters into an agreement to supply and install a power generation facility inside Canada with the installation to take about eight months. Subsequently, it assigns the "in Canada" services portion of the contract to its Canadian subsidiary, and the parties and the Canadian subsidiary enter into a restated contract under which these respective roles are set out. In determining whether the non-resident "carries on business" in Canada, will the CRA look to the time of signing of the contract, or to its conclusion; and does the restated agreement represent a "novation" resulting in the cancellation of the original supply in favour of two new supplies by the resident and the non-resident? CRA essentially did not answer the 2nd question, and respecting the 1st stated:

The determination of whether a non-resident is carrying on business in Canada is generally made based on a complete set of facts at the time the non-resident enters into an agreement to make taxable supplies in Canada and those supplies are deemed to be made.