Tax Court of Canada


Goods and Services Tax

Special rules

Management agreement creating agency relationship

572 Ltd. was owner of two commercial rental buildings forming part of multi-building common-strata complex. Other buildings in complex were owned by other entities and certain common areas were owned together by all owners as tenants-in-common. Buildings were subject of co-tenancy agreement between all owners. Under management agreement, S Inc. agreed to manage specified maintenance and owners paid proportionate share of expenses incurred by S Ltd. on their behalf, including HST, and pay management fee to S Inc.. S, shareholder of 572 Ltd., testified that S Inc. was not registrant under Excise Tax Act and therefore never claimed any income tax credit for GST or HST paid in respect of any services that it contracted for on behalf of owners. S Inc. acquired parking area forming part of complex with funds contributed by owners. S alleged that trust agreement was drawn up indicating that S Inc. would hold legal title and owners would have beneficial ownership of property. MNR denied 572 Ltd.’s claim for input tax credit in respect of HST paid by S Inc. on basis that 572 Ltd. did not provide proof of agency or trust relationship between S Inc. and 572 Ltd.. Appeal allowed. Management agreement produced by 572 Inc. was in effect during relevant reporting period and it created agency relationship between owners including 572 Inc. and S Inc..

572256 Ontario Limited v. The Queen (2017), 2017 CarswellNat 3581, 2017 CarswellNat 3710, 2017 TCC 108, 2017 CCI 108, B. Paris J. (T.C.C. [Informal Procedure]).


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