Section 183

[A] simple foreclosure order does not fall within the ambit of subsection 183(3) as this type of action does not typically involve a court ordered seizure and sale of property to satisfy a money type judgment. Under simple foreclosure proceedings, the mortgagee keeps the property to satisfy the debt owing whereas subsection 183(3) requires a seizure and sale of property to satisfy an amount owing under a judgment.

Application to public service body

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Example 14 – Seized property used by creditor

A registrant PSB resident in Saskatchewan is not a charity to which subsection 225.1(2) (net tax calculation for charities) applies. The PSB granted a loan to a Saskatchewan company in 2010 to purchase office equipment with the equipment serving as security for the loan. The company defaulted on the loan payments, and the PSB repossessed the equipment in 2013. The PSB begins to use the repossessed office equipment for its own purposes. In the claim period that the PSB begins to use the equipment, the PSB is required to account for GST on the fair market value of the equipment at the time it was repossessed, which is determined to be $25,000. The PSB is also considered to have paid GST on the equipment's fair market value of $25,000.

The PSB is deemed to have collected GST of $1,250 ($25,000 × 5%) on the fair market value of the office equipment. The GST deemed collected is accounted for by the PSB on line 103 (or on line 105 if filing electronically) of its GST/HST return.

The GST of $1,250 deemed to have been collected will be included in subparagraph 259(1)(a)(ii.1) when calculating the non-creditable GST charged in respect of the equipment for the claim period.

Example No. 9

A mortgagor cannot meet the mortgage payments and other financial obligations associated with his farmland. He cannot afford a lawyer and there is no possibility of his putting the mortgage in good standing. On December 1, 1991, he voluntarily transfers all his rights and title in the land to the mortgagee by Quitclaim Deed and the mortgagee becomes the registered owner, subject to all encumbrances. ...

If the voluntary transfer was executed before November 5, 1991, it would not constitute a seizure and repossession within the meaning of Section 183.

The date the quitclaim deed was executed by the debtor for real property will be used to determine if a quitclaim occurred after November 4, 1991. For personal property, voluntary transfers occur at the time when the property is physically handed over to the creditor or signs an agreement relinquishing all rights in the property.

A simple foreclosure action would not fall within subsection 183(10) as this type of action does not normally involve a supply of property to a third party to satisfy in whole or in part a debt or obligation owing by a person which is necessary under subsection 183(10). A post foreclosure private sale would not fall within 183(10) either since it would be difficult to say that such a supply was made for the purpose of satisfying in whole or in part a debt or obligation owing by a person. As a result of statute law, upon obtaining an order of foreclosure, the debt may no longer be owing in some jurisdictions. In addition, under the original foreclosure action, the mortgagee took the property in satisfaction of the debt and it is difficult to see how a subsequent supply of the property by the creditor was a right exercised under an Act of Parliament or the legislature of a province or any agreement to satisfy the debt or obligation. A simple foreclosure action may, however, fall within subsection 183(1).