Section 256.2

Subsection 256.2(1)

Qualifying Residential Unit

Administrative Policy

RC4231 "GST/HST New Residential Rental Property Rebate” October 2016

Meaning of having "possession" as purchaser

Possession - for GST/HST purposes, generally means that you hold, control, or occupy the property. For example, if you pay the property taxes, have the right to alter the land, control entry or access to the property, or pay insurance coverage, you may be considered to have possession of the property.

Words and Phrases
possession

Paragraph (a)

Subparagraph (a)(ii)

Administrative Policy

RC4231 "GST/HST New Residential Rental Property Rebate” October 2016

Summary of (a)(ii) test

Do you hold the unit for any one of the following purposes?
  • To make an exempt lease or sublease of the unit for use by an individual as a place of residence (including an exempt lease or sublease of the unit that you make to another person if that person holds the unit to make an exempt sublease of the unit for use by an individual as a place of residence).
  • To make an exempt supply of property or a service that includes giving possession or use of the unit under a lease, licence or similar arrangement entered into for the purpose of the unit's occupancy by an individual as a place of residence.
  • To make an exempt sale of the unit and an exempt lease of the related land under a single written agreement.
  • To occupy the unit as your primary place of residence where another unit situated in the same complex is a qualifying residential unit that you hold for one of the purposes listed above.

Clause (a)(ii)(A.1)

Administrative Policy

10 October 2019 GST/HST Interpretation 193324 - Clause (a)(ii)(A.1) of the definition of “qualifying residential unit”

a purpose of selling an apartment building is consistent for GST/HST purposes with holding each apartment for the purpose of leasing it

A person who is a “builder” for GST/HST purposes (the “Builder”) and an arm’s length purchaser which is not a “builder” for such purposes (the “Purchaser”) will enter into the “Purchase Agreement”) for the subsequent construction and sale by the Builder, and the Purchaser’s purchase, a multiple unit residential complex (the “Complex”), with the closing to occur after construction has been substantially completed. After construction of the Complex is substantially completed and occupancy permits are obtained for some or all of the residential units, the Builder will begin to enter into lease agreements with individuals under which the individuals will be given possession or use of a residential unit for the purpose of the occupancy of the unit by an individual as a place of residence. Such leased will be exempt supplies under Sched. V, Pt. I, s. 6. Prior to the closing day, one of the individual lessees will occupy a residential unit, thereby triggering a deemed self-supply by the Builder under s. 191(3) and with the Builder making new residential rental property rebate claims pursuant to s. 256.2(3) respecting the resulting HST payable by the Builder. Following the closing day, the Purchaser will continue to lease-up the remaining residential units situated in the Complex.

In finding that the Builder could satisfy s. (a)(ii)(A.1) of the definition of “qualifying residential unit” notwithstanding that the Builder was selling the Complex and, thus, the included residential units, CRA stated:

The terms “residential complex” and “residential unit” are defined in subsection 123(1) and are two distinct things for purposes of the GST/HST. Generally, a residential complex is a thing composed of two or more elements (such as the residential unit, common areas, appurtenances and land) and is a thing in its own right. A residential unit may be a component of a residential complex in certain situations, but it is also a thing in its own right.

As such, the Builder can hold the Complex (a residential complex) for the purpose of making a supply by way of sale to the Purchaser, and also hold the residential units contained therein for the purpose of making exempt supplies of the units by way of lease to individuals who will occupy the units as a place of residence.

Subparagraph (a)(iii)

See Also

Tsenkova v. The Queen, 2013 TCC 321 (Informal Procedure)

expectation not governed by lease terms

The appellant acquired a condominium unit for investment purposes, and leased it to a company ("Premier Suites") under an agreement which stated: "Landlord agrees that the intention of the Tenant is to sub-let the premises to corporate executives for the purpose of providing temporary accommodation."

Sheridan J found, notwithstanding this clause, that the appellant intended that the unit be used by a long-term occupant, and that the first subtenant in fact used the unit continuously as a residence for more than a year. Accordingly, and applying interpretation principles in Melinte, the property was a qualifying residential unit.

Boissonneault Groupe Immobilier Inc. v. The Queen, [2013] GSTC 41, 2012 TCC 362

reasonable expectation of lease renewals

The appellant build a 78-unit residential building meant for students at a local Cégep, whose school year ran from August to June. Although the appellant intended to enter into one-year leases, construction delays meant that the initial leases, which commenced on August 1, ran for only 11 months, except for leases with a 12 month term, with the 12th month offered at half the normal monthly rate. The Appellant already owned an adjoining 26-residential unit builidng where the renewal rate was about 90%. The self-supply by the appellant under s. 191(3), which was the time when the reasonable expectation test under s. (a)(iii) was to be applied, also apparently occurred on or shortly before August 1. In 2010, the appellant renewed with 11-month leases.

The Minister denied the s. 256.2 rebate for 42 of the 78 units in the new building on the basis that they wre not continuously occupied for 12 months, as required under s. (a)(ii)(B) of the qualifying residential unit definition.

Tardif J stated (at para. 29):

[T]he right of the appellant to the rebate is determined on the basis of the expected use of the unit. Therefore the test is satisfied if the appellant reasonably expects at the “particular time” that the usage will be as contemplated by clause (B).

He noted (at para. 57) that the Minister's approach instead "relied primiarily on the situation which prevailed upon the expiration of the first round of leases and on the circumstances that led to the second year of leasing."

In finding (at para. 59) that, in light inter alia of the prior experience with the smaller building that, at the particular time:

[T]he appellant’s initial intention, which was reasonable and based on a number of rational, reasonable, even probable, premises was to have all the residential units occupied for minimum periods of one year.

Melinte v. The Queen, 2008 TCC 185 (Informal Procedure)

purchaser was required only to satisfy reasonable expectation rather than actual use test

The appellant took possession in December 2004 of a newly-constructed condo unit and closed its acquistion on March 1, 2005 (when condominium registration was also received). Due to a change in plans, he did not move into the unit and leased it to CIBC World Markets ("CIBC") for a lease term of 11 months ending on December 28, 2005. CIBC was bound to provide housing for one of its employees while she was on a long-term assignment in Toronto from Montreal. CIBC initially planned to lease the unit for several years, but declined to renew the 11-month lease because of cutbacks. The appellant then lesed the unit to a second tenant, who occupied the premise form January 3, 2006 to June 24, 2007. The taxpayer claimed his s. 256.2 rebate sometime in the first year, which CRA denied (aparently based on its stated requirement in RC4231, based on s. (a)(iii) of the "qualifying residential unit" definition, that "the first use of the unit will or can reasonably be expected to be ...the primary place of residence of an indiviual who will occupy the unit continuously for a period of at least one year.")

Webb J (as he then was) found that the property was a "qualifying residential unit," whose "applicable clause" (para. 7) in this case was s. (a)(iii)(B). In particular:

  • the reference to "individuals" in s. (a)(iii)(B) includes a single individual, so it did not matter that there was only one tenant during the relevant period (para. 11);
  • in the situation, for example, where "two individuals occupy the unit – one for a year and the other for six months – ...on the basis that the plural includes the singular, the unit will qualify...by applying the test to the one individual who does occupy the unit for the whole year" (para. 12)
  • "if there is only one occupant of a unit, in order for the unit to qualify based on the actual use test, the unit will have to be occupied by the same individual for a full period of one year (or the shorter period of time contemplated by this clause [((B)])" (para. 20)
  • the phrase "place of residence of individuals" in s. (a)(iii)(B) does not entail a requirement that the individuals be party to the lease, so it did not matter that the CIBC was the lessor (para. 19);
  • the plural reference to "individuals" was intended to adress situations of simultaneous rather than successive ocupation - for example, under the second interpretation "If the first occupant uses the unit for twenty years, the unit would not be used by a second individual for at least a year until twenty-one years after the unit is first occupied" (para. 21), whereas there is a two-year time limitation under s. 256.2(7) for applying for the rebate (para. 26)
  • "at a the particular time" in s. (a)(iii) refers to the time that the unit is acquired (in this case, March 1, 2005) (para. 29);
  • at that time, the appellant reasonably expected that the tenant's occupancy would continue for several years under a lease renewal (para. 31); and
  • "no unit will be able to satisfy the actual use test at the relevant time...unless the actual use is a very short period of time" (para. 24) so that, generally, as was the case here, only the expected rather than acual use test should be applied (para. 32).

Administrative Policy

GST/HST Technical Information Bulletin B-087 “GST/HST new residential rental property rebate” November 2001

12-month test

  • the use as a primary place of residence by each such individual
  • must be for a period of at least one year, although not necessarily under one lease (e.g., an individual could occupy a unit for one year under twelve consecutive monthly leases); or
  • if the period is less than one year, the residential unit could still be a qualifying residential unit provided the unit:
    1. is sold to a recipient who acquires the unit for use as the primary place of residence of the recipient or a relation,
    2. is taken for use as the primary place of residence of the person or a relation, or
    3. is taken as the primary place of residence of a lessor of the complex or a relation of that lessor.

90% test for qualification of units

In general, the occupancy requirements set out in the definition of qualifying residential unit are applied on a unit-by-unit basis. In the case of large multiple unit residential complexes, i.e., 10 or more residential units, the entire complex is considered to meet the expected one-year occupancy test if substantially all of the units (90% or more) meet that test.

Sale of rental unit following claiming of rental rebate

A person who supplies a residential unit by way of lease may be entitled to the new residential rental property rebate where the unit is leased to an individual as a primary place of residence even if the person intends to sell the unit at the earliest opportunity. As provided in the definition of qualifying residential unit, if that sale is made to a recipient who acquires the unit as the primary place of residence of the recipient or a relation, the unit may still be a qualifying residential unit.

However, the rebate will have to be repaid with interest if:

  • the rebate was paid in respect of a single unit residential complex or a residential condominium unit where both the complex or unit and the land were supplied by way of lease by the person,
  • the complex or unit is sold to a purchaser who is not acquiring the unit for use as the primary place of residence of the purchaser or a relation of the purchaser, and
  • the sale is within one year from the time it is first occupied as a place of residence after the construction or last substantial renovation of the unit was substantially completed.

This repayment of the rebate does not apply to deemed sales under section 183 or 184, that is, sales deemed to have occurred due to seizures or repossessions or acquired by insurers on settlement of a claim.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 256.2 - Subsection 256.2(7) 77

16 April 2004 Interpretation 49628

no basis for expecting that the rental property’s tenant (the university) would sublease on a calendar rather than academic year basis

Two Canadian corporations, one of which was designated as the operator of a joint venture, constructed a multi-unit stacked townhouse complex, specifically designed as student residences, and then leased of the entire complex for 10 years to a local university, with the university, in turn, subleasing the townhouse units to students. At the time the joint venture operator self-assessed under s. 191, it was not known whether the sublease between the university and the individual students would be for a term of approximately 8-9 months (i.e. a typical academic year), or a term of 12 months (typically September-August) or a combination of both terms. However, the university then issued a letter stating that upon the departure of the students currently living in the residences at the conclusion of the academic year, the building would not be occupied until the fall. The subleases thus were for terms of approximately 8-9 months only (i.e. a typical academic year).

In finding that the rebate was not available, CRA stated:

[A]t the time GST on the deemed supply became payable by the joint venture operator, it was not expected that the first use of the units will be as the primary place of residence of the first lessees (i.e. the students) for a period of continuous occupancy of at least one year. Further, it is the case that the first use of the units was as primary place of residence of the first lessees for a period of continuous occupancy of 8 to 9 months only.

Subsection 256.2(3)

Cases

Canada v. Villa Ste-Rose Inc., 2021 CAF 35

CRA is required to make rebate if conditions satisfied

The respondent was a company that was not registered for GST purposes and was required to self-assess itself under ETA s. 191(3) for GST on the fair market value of an assisted-living facility constructed on its behalf. It filed the required return in this regard 9 months’ late. With that return, it also included rebate claims which were higher than the s. 191(3) tax. CRA accepted the GST payable and rebate amounts, but assessed interest and penalties under ss. 280 and 280.1, calculated on the gross GST amount, which it effectively treated as having been owing for the full 9-month period.

Before finding (at para. 69, TaxInterpretations translation) that the "amount" referred to in ss. 280 and 280.1 on which the interest or late-filing penalty was to be calculated “can only represent, in circumstances such as these, the amount of tax actually owed by the taxpayer” (i.e., the tax as reduced by the taxpayer’s rebate entitlement), Leblanc JA stated (at para. 51):

[A] review of subsections 256.2(3) and 257(1) shows that the entitlement to the rebates provided for therein arises when the conditions for entitlement specified therein are satisfied. Where this is the case, the Minister must proceed with the rebate. In other words, she has no choice not to do so. Her power is thus bound.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 280 - Subsection 280(1) “amount” on which interest and penalty calculated reflected reduction for rebate claim even though s. 296(2.1) not directly applicable 418
Tax Topics - Excise Tax Act - Section 228 - Subsection 228(6) s. 228(6) would have resulted in set-off of rebate claim against net tax 254
Tax Topics - Statutory Interpretation - Resolving Ambiguity provision was not clear and unequivocal, so that purpose and policy could be resorted to 148
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(2.1) set-off under s. 296(2.1) informed an implied set-off in determining “amount” in s. 280(1) 273

See Also

Blanche's Home Care Inc. v. The Queen, [2004] GSTC 30, 2004 TCC 192 (Informal Procedure)

purchase of assisted-living facility did not generate rebate

The appellant was not eligible for the new residential rental property rebate in respect of its purchase of a property that was a "personal care home" under the Personal Care Homes Act and Personal Care Homes Regulations, 1996 (Saskatchewan) in light of evidence of the appellant that approximately $1,000 of the $1,750 monthly fee paid by residents of the home (most of whom had a medical issue such as Alzheimer's) was attributable to personal care services. Beaubier J. accepted the submission of the Minister that the appellant was making a single supply of services to the residents under the "Admission Agreements" with them rather than (having regard to the definition of qualifying residential unit before the additio of s, (a)(ii)(A.1) thereof) a supply of accommodation described in Sched. V, Pt. I, s. 6.

Administrative Policy

GST/HST Notice 323, Proposed GST/HST Treatment of Assignment Sales, May 2022

S. 192.1 rendering of all assignments taxable and excluding the deposit amount may affect the NRRPR (p. 4 under Q.5)

The amount of a new residential rental property rebate (NRRPR) under the GST/HST legislation is determined based, in part, on the total tax payable in respect of a residential complex and the fair market value of the qualifying residential unit that forms part of the complex at the time the GST/HST becomes payable on the purchase of the complex. As a result of the proposed amendment, where an assignment agreement is entered into after May 6, 2022, the GST/HST applies to assignment sales that were not otherwise taxable, and the amount attributable to a deposit is excluded from the consideration for all taxable assignment sales. Consequently, the proposed amendment may have an impact on the total tax payable in respect of the complex, which may affect the amount of a GST/HST NRRPR in respect of the GST or the federal part of the HST, or of an NRRPR in respect of the provincial part of the HST.

11 August 2021 GST/HST Interpretation 184857 - Eligibility for the New Residential Rental Property Rebate

a co-purchaser of a new rental property can qualify for the NRRPR, even if his co-purchaser does not

Two unrelated individuals (Individual 1 and Individual 2) agreed to purchase a single unit residential complex from the builder for rental purposes. However, due to second thoughts, Individual 1 did not close the purchase, so that the condo unit and title thereto were acquired only by Individual 2.

In finding that Individual 2 was entitled to claim the new residential rental property rebate (NRRPR), CRA stated:

[I]n a situation where a group of persons is applying for the NRRPR … [e]ach person would be treated separately and would have to meet the eligibility requirements for that person to claim an NRRPR. As such, if one person does not meet all the eligibility requirements, it will not preclude the other person(s) from qualifying for the rebate … .

Accordingly, Individual 2 qualified for the rebate. Although Individual 1 qualified as a “recipient” of the supply of the unit (based on being liable for purchase price under the purchase agreement), Individual 1 did not qualify as becoming a co-owner of the unit, and furthermore “as the title is in [Individual 2]’s name, it would be reasonable to say that [Individual 1] would not have possession of the residential unit even if his name is on the agreement of purchase and sale.” “That being said, only [Individual 2] meets the requirement in 256.2(3)(c).”

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient named co-purchaser of a condo was a recipient of the supply even though he did not close 72

28 February 2019 CBA Roundtable, Q.11

JV operator (with a proprietary interest) of a new apartment project is the one to claim the NRRP rebate

Where there is a joint venture to construct a multiple unit residential complex (MURC), is the “operator” of the joint venture who has a beneficial interest in the project and who has been appointed pursuant to s. 273 entitled to: (i) report and remit the GST/HST that is deemed under s. 191(3) of the ETA to have been collected by the builder; and (ii) claim any eligible new residential rental property rebates that are available under s. 256.2? CRA responded:

Where the operator has a beneficial ownership interest in the real property on which the MURC is constructed, it will likely meet the definition of “builder” if the operator carries on, or engages another person to carry on for the operator, the construction of the MURC. …

Furthermore, if the operator meets the definition of “builder,” then the operator is within the deeming rules under subsection 191(3) and will be required to report and remit the GST/HST that is deemed under subsection 191(3) to have been collected by the builder. …

Even if the operator is a “builder” that is required under subsection 191(3) to report and remit the tax on the self-supply of the MURC, it may not necessarily be entitled to a rebate under subsection 256.2(3) if the residential unit does not meet the definition of a “qualifying residential unit” or if any of the other conditions under section 256.2 for claiming the rebate are not met.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Builder more than one person can meet the definition of “builder” 195

12 February 2013 Interpretation File 145624

NRRP rebate claimed by beneficial owner rather than bare trustee

A bare trustee (Properties) entered into an agreement for the purchase of a new residential rental unit on behalf of Holdings, so that the statement of adjustments indicated that Properties was the purchaser. Before indicating that the application for the new residential rental property rebate should be filed by Holdings, CRA stated:

[I]n a bare trust situation, it is the beneficial owner that faces the obligations and entitlements under the ETA. As it applies to this scenario, it is the beneficial owner that may be entitled to the NRRP rebate.

RC4231 "GST/HST New Residential Rental Property Rebate” October 2016

Determination of unit FMV

For qualifying residential units that are located in a newly constructed multiple unit residential complex, the percentage of floor space of a qualifying residential unit in comparison to the total floor space for all of the residential units will be multiplied by the FMV of the residential complex to determine the FMV of the unit.

28 May 2004 Ruling RITS 47263

nursing home ineligible prior to new 6.11

The person constructing a nursing home was not eligible for the rebate, given that the supplies to the residents were exempted under s. 2 of Part II of Schedule V rather than under Part I.

Paragraph 256.2(3)(a)

Administrative Policy

GST/HST Info Sheet GI-093 Harmonized Sales Tax: Ontario New Residential Rental Property Rebate July 2010

Similar Ontario rules except available for more expensive units

The rules and conditions for claiming the Ontario new residential rental property rebate generally mirror the rules and conditions for claiming the GST/HST new residential rental property rebate explained in Guide RC4231… . However, the Ontario new residential rental property rebate applies to qualifying rental properties across all price ranges and different rebate rates are used.

Available to co-owners

Where more than one person owns the rental property, the rebate is payable to all of the owners of the property. The CRA will issue one cheque for the rebate amount in respect of both the federal and provincial parts of the HST in the name of all of the owners.

Paragraph 256.2(3)(b)

Administrative Policy

RC4231 "GST/HST New Residential Rental Property Rebate” October 2016

Timing of tax payable on condo purchase

If you purchase a qualifying residential unit that is a residential condominium unit where possession of the unit is transferred to you before the complex is registered as a condominium, the tax is payable (and you have to determine the FMV of the condominium) on the day that is the earliest of the following dates:

  • the day that ownership of the unit is transferred to you; and
  • the day that is 60 days after the day the complex is registered as a condominium. ...

Example: interim occupant and purchaser of condo

James enters into an agreement to purchase a residential condominium unit in September 2013 for $300,000. He does not take possession until May 1, 2016. The complex is not registered as a condominium until July 1, 2016, and the deed of ownership is transferred to James on August 1, 2016. Since tax is payable on the earlier of the day ownership is transferred (August 1, 2016) and 60 days after the complex is registered as a condominium (August 29, 2016), August 1, 2016, is the day that tax is payable.

Example: closing by condo purchaser while tenant of purchser leasing it

Claire enters into an agreement to purchase a residential condominium unit on September 15, 2014. Claire takes possession of the unit and her tenant occupied the unit on March 1, 2016. The complex is registered as a condominium on May 1, 2016. The deed of ownership is transferred to Claire on June 1, 2016. Since tax is payable on the earlier of the day ownership is transferred (June 1, 2016) and 60 days after the complex is registered as a condominium (June 30, 2016), June 1, 2016, is the day that tax is payable. Claire enters June 1, 2016, in Section B [of GST524].

Subsection 256.2(7)

See Also

Liao v. The Queen, 2010 TCC 587, [2010] GSTC 169 (Informal Procedure)

Application sent by ordinary mail thereby received

The appellant’s claim was denied under s.256.2 on the basis that the application was not made within the two year limitation period set out in s. 256.2(7)(a)(iii), which began running from June 30, 2007.

After stating (at para. 7), “Although it is possible that the application was not delivered due to insufficient postage, it is just as likely that the document was lost by the CRA.”, Woods J. in concluding that that application had been timely filed stated:

[S.] 334(1) …provides that anything sent by first class mail is deemed to have been received on the day that it is mailed.

Other locations for this summary
Application sent by ordinary mail thereby received.

Administrative Policy

May 2019 CPA Alberta CRA Roundtable, GST Session – Q.10

it would be “fair” to adjust the rebate when assessing under s. 191(3)

Notwithstanding the posted question’s wording, CRA apparently addressed a different question of how to secure an increased NRRPR rebate when CRA is proposing to assess to increase the amount of GST/HST self-assessed under s. 191(3) based on an increased fair market value for the property. CRA responded:

[S]ubsection 296(2.1) only applies to unclaimed rebate amounts and cannot apply in cases where the person has claimed the allowable rebate in an application filed before the day the notice of assessment is sent to the person per paragraph 296(2.1)(b). … Furthermore, the registrant would be precluded from claiming and submitting a new rebate application as only one application per rebate per matter can be made pursuant to subsection 262(2). … The registrant could request a re-assessment or consideration in the course of the audit of the NRRPR to take into account the change in GST/HST payable on the FMV provided the time limitation for assessing the rebate has not expired. However, we should note that there is nothing preventing (again, provided the rebate is not statute barred from re-assessment) the auditor from pulling in the original rebate and making the adjustments to the rebated amount in cases like the one described in this question. As an extension of service and fairness, it would be appropriate for the auditor to do so.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(2.1) ss. 296(2.1) and 262(2) technically prohibit adjustment to already-filed NRRP rebate claim 121

9 December 2014 Interpretation 165597

rebate form must be signed (or otherwise certified)

An Ontario builder, who submitted multiple applications for the Ontario transitional new housing rebate (OTNHR) using Form RC7000-ON, Ontario Retail Sales Tax (RST) Transitional New Housing Rebate, indicated that the OTNHRs had been assigned to it. However, neither section F, "Certification", nor section G, "Assignment of rebate", of Form RC7000-ON were signed by any of the purchasers. CRA stated:

Where the CRA receives a Form RC7000-ON in respect of the purchase of new housing by an individual and the assignment of that rebate to the builder, sections F and G of Form RC7000-ON must both be signed by the individual. The CRA should not accept that an assignment of the OTNHR has occurred, or pay any amount of a rebate to a supposed assignee, unless both sections F and G are signed by the individual (or there is other evidence of the individual having certified the information in those sections) and the CRA is satisfied as to the validity of the assignment.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 262 - Subsection 262(1) rebate form must be signed (or otherwise certified) 166

GST/HST Technical Information Bulletin B-087 “GST/HST new residential rental property rebate” November 2001

Applying for the New Residential Rental Property Rebate

…Registrants may offset the amount of the rebate on their return when calculating the amount to be remitted and file the claim with their return.

When more than one person is eligible for the rebate, i.e., there is more than one eligible claimant in respect of the property, each person will be required to file an application for the portion of the rebate to which they are entitled.

Paragraph 256.2(7)(a)

See Also

Poirier v. The Queen, 2019 TCC 8

no power to extend 2-year deadline even where new housing rebate mistakenly applied for within 2 years

Before going on to reject an argument based on s. 32 of the Interpretation Act that the appellant should be treated as having applied for the new rental housing rebate within the two-year deadline in s. 256.2(7) and an argument that s. 296(2.1) effectively overrode this limitation, Smith J stated (at para 12):

A number of decisions of this Court have dealt with instances where an appellant, having initially filed the New Housing Rebate form, later applied for the Rental Rebate after the expiry of the two-year deadline. Those decisions stand for the proposition that this Court has no jurisdiction to extend the time limit set out in subsection 256.2(7) and thus, no power to order the Minister to allow the Appellant’s Rental Rebate … .

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 297 - Subsection 297(1) 12 months to bounce a rebate application was “with all due dispatch” 314
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(b) intention to occupy vitiated when agreement to lease the new condo 103
Tax Topics - Statutory Interpretation - Interpretation Act - Section 32 failure to state material particulars not cured by s. 32 151
Tax Topics - Excise Tax Act - Section 262 - Subsection 262(1) failure to include prescribed information vitiated purported new rental housing rebate application 268
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(2.1) s. 296(2.1)(b) precluded using s. 296(2.1) to overcome the 2-year deadline for claiming the NRRP rebate 302

Ahmad v. The Queen, 2017 TCC 195 (Informal Procedure)

CRA required to determine in assessing HST on house purchase whether an unclaimed rebate was available

CRA correctly assessed an individual (Ahmad) so as to deny the new housing HST rebate (because, due to a change in plans, the first use of the new home was its rental to a third party), and advised him that he might consider applying for the New Residential Rental Property Rebate (NRRPR). Ahmad instead appealed the denial of the new housing rebate, and did not apply for the NRRPR until the two-year deadline for doing so (under ETA s. 256.2(7)(a)) had passed – and also failed to file a Notice of Objection to the CRA assessment denying his NRRPR claim.

Russell J found that Ahmad could not appeal the assessment denying him the NRRPR. However, Russell J found that CRA, in assessing Ahmad for the HST that was payable given the absence of the new housing rebate, had been required under s. 296(2.1) to in fact determine whether that assessment was reduced by another allowable rebate, namely, the NRRPR. Russell J referred this assessment back to CRA for the required determination under s. 296(2.1) as to whether Ahmad was entitled to an allowable rebate for the NRRPR.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(2.1) CRA was required to determine, when assessing, whether the taxpayer had an unclaimed GST/HST rebate 456

Paragraph 256.2(7)(c)

Administrative Policy

29 May 2006 Interpretation 44287

s. 191 tax not reported in reporting period of first occupancy

Holdco, which constructed and operated an assisted–living facility, has not reported the deemed s. 191 tax in its return for the reporting period in which the tax was deemed to be collected, nor has Holdco remitted such tax. As the condition in s. 256(7)(c) has not been satisfied, Holdco is not entitled to claim the NRRP rebate.

Subsection 256.2(10)

Administrative Policy

25 March 2021 CBA Commodity Taxes Roundtable, Q.3

no requirement to repay an NRRP Rebate that was never claimed

A builder constructs a new residential condominium complex containing 300 units. Although most are sold, it rents 10 units to individuals pursuant to 1-year leases on January 1, 2021, resulting in a s. 191(3) self-supply. However, on January 15, 2021, it sells the units (with the closing on February 15, 2021) so that the third-party purchaser becomes the landlord. The builder does not claim the new residential rental property (“NRRP”) Rebate respecting any of the 10 rental units in its January 2021 return (as such rebate would be required to be immediately repaid under s. 256.2(10) as the units’ purchaser did not acquire for personal use).

On a literal reading of s. 256.2(10), the builder is required to pay an amount equal to the NRRP Rebates to which it would have been entitled had it not sold the 10 units (even though in fact it never claimed or received the rebates) given that the operative phrase in s. 256.2(10) is “entitled to claim” the NRRP Rebates. However, CRA inferred from, inter alia, the reference in the Explanatory Notes to s. 256.2(10) establishing a requirement to “repay” the rebate (s. 256.2(10) itself instead uses the word “pay”) that the requirement to “repay” the rebates only arose when the rebates had actually been received, so that there was an amount to pay back. for each of the 10 rental units. Will CRA nonetheless only invoke s. 256.2(10) if the builder actually claims the NRRP Rebate, rather than assessing the builder in the amounts of the NRRP Rebates even if the builder never makes the NRRP Rebate claim?

CRA referred to the Explanatory Notes, which stated:

Subsection 256.2(10) requires a person who was eligible for the New Residential Rental Property Rebate to repay the amount of the rebate plus interest calculated on the amount for the period from the day the rebate was paid or applied to a liability of a person and ending on the day the person repays the amount. [emphasis added]

CRA then stated:

In the explanatory notes, the term “repay”, which the Merriam-Webster dictionary defines as “to pay back” or “make a return payment to”, would lead us to conclude that 256.2(10) would only apply to a situation where a rebate was paid to a claimant. Otherwise, there would not be an amount to pay back. Furthermore, the notes explain that the interest would be calculated based on the time period beginning on “the day the rebate was paid or applied to a liability of a person”. If a rebate was never requested, there would not be a rebate amount paid or applied to a liability of a person.

In conclusion, subsection 256.2(10) would only apply if the person claimed a New Residential Rental Property Rebate and within the first year, no longer qualified for that rebate.

Words and Phrases
repay