Napoli v. The Queen[1] (September 30 ,2013) involved the taxpayer’s claim to a New Housing Rebate under the GST provisions of the
Excise Tax Act.[2] In order to qualify for the New Housing Rebate clause (i)(A) of paragraph 254(2)(g) of the ETA required that the appellant or a relation of the appellant be the first individual to occupy the unit as a place of residence after substantial completion of the unit. The agreement of purchase and sale was dated October 13, 2007 and closed on October 31, 2007. On October 26, 2007 the appellant entered into a one year lease with an unrelated party, Ms. King. Ms. King took possession of the property on November 15, 2007.
The court rejected the appellant’s claims that his wife’s parents had spent time in the property between the closing and Ms. King taking occupation:
[8] I do not accept that the appellant and his spouse were still intending to have her parents occupy the property after they entered into the tenancy agreement with Ms. King. I also find it highly unlikely that the appellant’s spouse’s parents would spend some nights at the property between October 31 and November 17, 2007 while work was still being done by the builder on the property to correct deficiencies. Furthermore, Ms. King, the tenant, said that when she moved in, she could see no sign that anyone had used the property or lived in it. Finally, it makes no sense to me that the appellant’s spouse’s parents would spend time in the property after the decision to rent the property had been made. Even if I had accepted that they did sleep at the property on occasion before the tenant moved in, the evidence falls far short of showing that those overnight stays amount to occupying the property as their residence.
Similarly the court rejected the appellant’s claim that he and his spouse spent time there in the post-closing period:
[10] As for the suggestion by the appellant’s representative that the appellant and his spouse occupied the property as a place of residence after they took possession, I note that the appellant testified that after each occasion on which they visited the property between October 31 and November 17 (to hang curtains, install a dishwasher and do various small jobs) they returned home each night.
Finally the alternate claim to a Rental Housing Rebate was rejected since it was out of time:
[14] Since GST became payable on the purchase of the property on the closing date, October 31, 2007, the time limit for applying for a rental property rebate would have been October 31, 2009. The appellant only filed a Rental Property Rebate application in 2011 after the Minister denied his New Housing Rebate claim.
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[16] The appellant stated that other taxpayers who purchased property from the same builder and who claimed the New Housing Rebate but who rented out their properties were allowed by the CRA to file the Rental Property Rebate applications in place of their New Housing Rebate applications, and were in fact granted those rebates.
[17] Again, I agree with counsel for the respondent that I cannot take into account the CRA’s treatment of those other taxpayers. I am required to apply the provisions of the ETA to the facts of this case, and as I have indicated, the application by the appellant for the rental property rebate was out of time.
[18] This is a harsh result for the appellant, and I am sympathetic to his position. However, I must dismiss the appeal.
This was not an unexpected result based on the facts before the court.
[1] 2013 TCC 307.
[2] R.S.C. 1985, c. E-15, as amended (the “ETA”).