Date: 20010810
Docket: 2001-233(GST)I
BETWEEN:
MICHEL E. VALLIÈRES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Hamlyn, J.T.C.C.
[1] The Appellant filed an Application for the amount of $3,150.00 which was received by the Minister of National Revenue (the "Minister") on November 30, 1999.
[2] By Notice of Goods and Services Tax (the "GST") assessment numbered 9934002051237 2 and dated April 14, 2000, the Minister notified the Appellant that his Application had been disallowed.
[3] The Appellant engaged in the construction of a residential complex, in Orléans, Ontario, that was a single unit residential complex for use as his primary place of residence (the "Complex").
[4] The Appellant commenced to occupy the Complex as his primary place of residence in the interval between July - September 1997.
[5] The Appellant was the first person to occupy the Complex after the construction began.
[6] The Complex was, at all relevant times, occupied as a primary place of residence.
[7] The Appellant filed a GST/HST New Housing Rebate Application (the "Application") which was received by the Minister on November 30, 1999.
[8] The Appellant states that he obtained partial occupancy of the Complex from the local municipality on June 10, 1998.
[9] The Minister submits that construction of the Complex was substantially completed by October, 1997.
[10] In his Notice of Appeal the Appellant stated:
According to the letter sent to me on the 25th day of October 2000, my appeal was rejected. Your forms and instructions state that we are eligible to claim for a GST rebate up to two years after completion of construction. Nowhere in these documents do they make reference to any calculation of the percentage of completion, the criteria or percentages used and that it is at the discretion of the reviewing officer.
...
Even though some materials were purchased in the time period mentioned they were purchased because of pricing or availability and does not imply that these tasks were performed. I did not get partial occupancy before June 10th 1998 as the house was not ready before then.
Examples:
a) sheeting for the roof more than doubled in the summer of 1997 because of supply and demand in Florida (hurricane Andrew) so I purchased the materials required at the same time as much as I could in order to save some money;
b) white oak hardwood flooring which is hard to come by was also purchased because of the amount required (2500 square feet), it was not installed until much later.
As I was performing most of the work myself, as well as taking care of my already established clients performing some of these tasks were very time consuming and were performed at a rather slow pace.
You have disallowed my claim as you are assuming that my house was completed sometime during the period of July-October of 1997 and I applied for my GST rebate in November 1999 stating that I was 1 (one) month overdue even though my partial occupancy states June 10th 1998.
[11] The issue to be decided is whether the Appellant is entitled to a rebate pursuant to section 256 of the Excise Tax Act[1].
ANALYSIS
[12] The issue on appeal turns on whether the Appellant's Application was statute-barred under subsection 256(3) of the Act.
Relevant Legislative Provisions
[13] The New Housing Rebate is available for owner-built homes under section 256 of the Act. The relevant provision is subsection 256(3), which states as follows:
256(3) Application for rebate -- A rebate under this section in respect of a residential complex shall not be paid to an individual unless the individual files an application for the rebate within two years after the earliest of
(a) the day that is two years after the day the complex is first occupied as described in subparagraph (2)(d)(i),
(a.1) the day ownership is transferred as described in subparagraph (2)(d)(ii); and
(b) the day construction or substantial renovation of the complex is substantially completed. [emphasis added]
[14] Subsection 256(3) of the Act precludes the payment of a new housing rebate unless the rebate applicant files an Application therefore within two years of the earlier of either the day that is two years after the day the Complex is first occupied or the day construction is substantially completed.
[15] The term "substantially completed", as it appears in paragraph 256(3)(b) of the Act, is not specifically defined in the legislation.
[16] The 90% threshold test is used by the CCRA as an administrative rule of thumb. However, this test is very imprecise and has consistently been criticized. There is a complete absence of criteria on which to base such an estimate. Ostensibly, the CCRA may consider "substantially complete" to mean something less than 90%. However, it is unlikely that a level of completion below 70% would amount to "substantial completion" as envisaged by the Act.
[17] The 90% or more rules must always be qualified by the fact that the purchaser must be able to reasonably inhabit the premises. To a large extent, that can have a subjective component and one has to take into account the particular purchaser, but not to the point where objective standards can be disregarded.
[18] To be "substantially completed" a residential complex must be capable of being used for the purpose for which it was constructed.
[19] In determining what constitutes "substantial completion" there must be a certain common-sense assessment of what, on the facts of the particular case, a reasonable person would regard as substantial completion.
[20] The evidence from the Appellant was that he commenced to occupy the residence in July - September 1997 and that by October 1997 - 88.5% of the materials had been purchased but that considerable construction was yet to be completed. Further, he believed he had plenty of time to file the Application as he felt the New Housing Rebate instructions focused on the concept of "substantial completion". He also emphasized the municipal corporation issued a building inspection report on June 10, 1998 stating the residence was as of that date "OK for partial occupancy". It is also quite clear from the Appellant's evidence, while the residence was not completed, he and his family were moved and living in the premises by September 1997. His children were attending local schools.
[21] I conclude on the totality of the evidence the Appellant's residence was not substantially completed until June 10, 1998.
CONCLUSION
[22] The Appellant's Application was filed on November 30, 1999 and that was within two years after the construction of the Complex was substantially completed (June 10, 1998).
[23] The Appellant is entitled to a rebate pursuant to section 256 of the Act with respect to the Complex.
DECISION
[24] The appeal is allowed. The Appellant is entitled to a rebate pursuant to section 256 of the Act with respect to the Complex.
Signed at Ottawa, Canada, this 10th day of August 2001.
"D. Hamlyn"
J.T.C.C.
COURT FILE NO.: 2001-233(GST)I
STYLE OF CAUSE: Michel E. Vallières and
Her Majesty the Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: August 7, 2001
REASONS FOR JUDGMENT BY: the Honourable Judge D. Hamlyn
DATE OF JUDGMENT: August 10, 2001
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Yves Parent
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-233(GST)I
BETWEEN:
MICHEL E. VALLIÈRES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on August 7, 2001 at Ottawa, Ontario, by
the Honourable Judge D. Hamlyn
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Yves Parent
JUDGMENT
The appeal from the assessment numbered 9934002051237 2 made under the Excise Tax Act, notice of which is dated April 14, 2000 is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of August 2001.
|
"D. Hamlyn" |
J.T.C.C.