Ahmad v. R. – TCC: Denial of GST Rebate referred back to Minister for reconsideration

Ahmad v. R. – TCC:  Denial of GST Rebate referred back to Minister for reconsideration


Ahmad v. The Queen (September 29, 2017 – 2017 TCC 195, Russell J.).

Précis:  The taxpayer and his cousin agreed to purchase a condominium in 2011 where they intended to reside.  When the transaction closed in 2013 their plans had changed and the taxpayer was working in Saskatoon and his cousin had gone to Pakistan to pursue his education.  They placed the property for sale but were unsuccessful.  They rented the property to unrelated parties for three years after which it was sold.  The taxpayer was denied a New Housing Rebate (NHR) and, subsequently, a New Residential Rental Property Rebate (NRRPR).  He appealed the NHR to the Tax Court but did not file an objection or appeal in respect of the NRRPR claim.

The Tax Court found that CRA had properly denied the NHR since the taxpayer never occupied the property in question.  However it referred the question of whether he was entitled to the NRRPR claim back to CRA for reconsideration, holding that the NRRPR claim formed part of the assessment under appeal.  Thus the appeal was allowed for the purpose of referring the appealed February 20, 2014 assessment back to the Minister for reconsideration and reassessment whether the taxpayer was entitled to the NRRPR claimed.  There was no order as to costs since this was an informal procedure appeal.

Decision:   The facts were straightforward:

[9]              The basic underlying facts of the matter are as follow. In February 2011 the Appellant and his brother entered into an agreement to purchase a residential property in Mississauga, a condominium to be constructed. Their intention at that time was that each would live in this property. About two years later construction of the condominium property was finalized and the brothers’ purchase/sale transaction respecting the property closed February 21, 2013. But in the very latter portion of this two year interim period following their February 2011 agreement to purchase the property the two brothers, both young men, each had had his life turn in a different direction. The Appellant now was moving to Saskatoon for employment there. The brother now was headed to Pakistan for schooling. No longer would either of them be remaining in the Toronto area so as to live in the new property in Mississauga.


[10]         With this late development in or about early 2013, the brothers decided to try to sell the property. This effort initially was unsuccessful, due at least in part to oversupply of condominium units in the market. So the brothers chose to try to rent the property, while continuing to seek to sell it. The property accordingly was rented promptly upon completion of construction, firstly to an individual not related to either of the brothers. Eventually, more than three years later, the condominium finally was sold.


[11]         The builder/seller of the property submitted on behalf of the Appellant the NHR application, received by the Minister on March 28, 2013. The Appellant’s signature is on this document. As stated, this application was denied by assessment raised February 20, 2014. Per the Respondent’s Reply, the application was denied on the basis that neither the Appellant nor his brother nor any qualifying relation of either was the first to occupy the property following substantial completion of its construction, nor was it sold without any individual having resided in the property in the interim.

The taxpayer subsequently filed an application for a NRRPR in respect of the property:

[15]         The Minister thus had determined that the NHR application did not abide by the above-noted paragraph 254(2)(g) of the Act, which requires either that the individual being the claimant or a relation must be the first person to occupy the property as a place of residence; or that the individual made an exempt supply of the property by way of sale, with ownership transferred without in the interim any individual having resided in the property.


[16]         The Appellant filed a notice of objection to the February 20, 2014 assessment more than a year later - May 1, 2015. But he did not then, despite the cues in the February 14, 2014 letter from the auditor and also in the February 20, 2014 notice of (re)assessment, apply for a NRRPR.


[17]         The objected-to assessment re the denied NHR was confirmed March 17, 2016.


[18]         Several days prior to this, the Appellant then had proceeded to submit a NRRPR application regarding the Mississauga property. Just over a month later, the Minister denied that application; this conveyed by a notice of (re)assessment dated April 27, 2016 which included the statement that the NRRPR had been denied because:


… we did not receive the application within two years of the date tax became payable on purchase…as set out in the [Act].


[19]         At no time did the Appellant file a notice of objection to that April 27, 2016 assessment, or file an application to extend time to file a notice of objection to that assessment. Rather, as recounted above, on June 13, 2016 the Appellant proceeded with filing in this Court the notice of appeal commencing the herein appeal.

While there was no NRRPR appeal before the Court, it considered both the NHR and NRRPR issues as part of the available remedies.  It quickly concluded that the NHR claim was not tenable:

[24]         As noted, paragraph 254(2)(g) requires that the Appellant or a relation have been the first to occupy the new premises as a residence, upon construction completion. It is clear that that did not occur here. The brothers both had altered their career plans during the almost two year period prior to completion of construction of the condominium property in Mississauga they had agreed to buy. Neither after-all was going to remain in the Toronto area so as to be able to reside in the property upon construction completion. The evidence is straightforward and un-equivocating on this point.

The Court found however that the Minister had failed to adequately assess the NRRPR claim and directed the matter back to the Minister for reconsideration:

[42]         The matter of whether the Appellant would qualify for an NRRPR was not argued before me and accordingly I am unable to express any finding on this point. But I do consider that that question is, per subsection 296(2.1), a matter for the Minister to “determine” as part of the assessment of February 20, 2014, which assessment is under appeal herein. The Minister would have at hand information from the auditor’s February 2014 and earlier discussions with the Appellant and now also as set out in the 2016 NRRPR application, to consider in so determining. Certainly the Minister had encouraged the Appellant in February 2014 when the NPR application was denied to submit a NRRPR application; signalling that the Minister considered that the Appellant might well qualify for that rebate.


[43]         In my view having the Minister now make a subsection 296(2.1) determination as to “allowable rebate” would be in the nature of redressing the February 20, 2014 assessment, which is the assessment currently before this Court. The opening words of subsection 296(2.1) refer to the Minister determining (“determines”), “[w]here, in assessing…an amount that became payable by a person under this Part…” Note that the determining to be done by the Minister is statutorily expressed as being an element of the assessment itself.


[44]         Also, in my view having the Minister now “determine” is consistent with the several requirements of subsection 296(2.1), noting that the actual NRRPR application was filed well after when the subject tax became due and overdue in February 2013, and well after the raising of the pertinent assessment, being the February 20, 2014 assessment.

Thus the appeal was allowed for the purpose of referring the appealed February 20, 2014 assessment back to the Minister for reconsideration and reassessment whether the taxpayer was entitled to the NRRPR claimed.    There was no order as to costs since this was an informal procedure appeal.