http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/119790/index.do
K.M. Construction et Rénovation inc. v. The Queen (September 8, 2015 – 2015 TCC 206, Lamarre A.C.J.).
Précis: The taxpayer corporation transferred a property to its principal shareholder in 2010 for $510,000 which $65,000 less than the 2009 Montreal property tax assessment ($575,000) for the property. The taxpayer was assessed GST based on the high valuation. The Tax Court reviewed the evidence and concluded that the taxpayer had not met the onus of demolishing the assumption of the Minister as to the value of the property. The appeal was accordingly dismissed. There was no order as to costs since this was an informal procedure appeal.
Decision: The facts were not complex:
[1] The appellant is appealing from an assessment made by the Minister of Revenue of Quebec (Minister) under the Excise Tax Act (ETA) dated November 20, 2012, in which it is being asked to pay $14,082.56 for the Goods and Services Tax (GST) plus interest. The assessment results from the sale of an immovable located at 2560 to 2580 Georges Avenue, in Montréal, to the appellant’s majority shareholder, Moheub Ismail, and his spouse for the total amount of $510,000, taxes included.
[2] There is no dispute that, since the appellant sold the property to persons with whom it does not deal at arm’s length, the disposition was to be at the Fair Market Value (FMV) for GST purposes, under section 155 of the ETA.
[3] In making the assessment, the Minister considered that the property’s Fair Market Value at the time of the sale, October 6, 2010, was at least equivalent to the municipal assessment by the City in the amount of $575,000 (taxes included) as of July 1, 2009.
[4] This value therefore exceeds by $65,000 the proceeds of disposition established by the appellant.
The taxpayer did not succeed in attacking the position of the Minister:
[42] Mr. Ismail filed in evidence an assessment he had done by qualified appraisers on another property, showing that the FMV of that property was lower than the municipal assessment in 2015 (Exhibit A‑8). Unfortunately for the appellant, I am of the view that this does not help his cause with respect to the property at issue. That assessment does not concern either the property or the year at issue. I am unable to establish, without the assistance of a witness who has some expertise in the field, that an assessment by qualified appraisers would have yielded a FMV lower than the municipal assessment of the property in question in 2009.
[43] In addition, after having reviewed the evidence, I consider that the respondent has demonstrated, through the City appraiser’s testimony, that the value assigned was similar to the property’s FMV at the time of the sale. Indeed, it is my view that said assessment was done at about that very same time, considering the sales that were quite similar to property in question. The fact that Mr. Ismail has attempted, unsuccessfully, to sell his property since 2013 cannot affect the value of the property in 2009. There are too many factors that can come into play over a period of four years.
[44] Furthermore, the value established in 2009 was balanced in 2012, establishing an increase value of 9% between 2009 and 2012. The value of $575,000 used by the City in July 2009 and assigned by the respondent to the property at the date of the transfer in 2010 would therefore be advantageous for the appellant.
[45] In the circumstances, I think the appellant also failed to adduce sufficient evidence to demolish the Minister’s assumption that the property’s FMV was $575,000 at the time of the disposition.
The appeal was accordingly dismissed. There was no order as to costs since this was an informal procedure appeal.