Tax Court of Canada


Taxation

Goods and Services Tax
Registrant was required to pay Goods and Services Tax on annual resort fee

Canadian Developer created registrant CI to facilitate administration of vacation homes in resorts in Canada, US and Mexico as part of vacation home ownership program. Canadian Developer transferred its interests in Canadian vacation homes, and US Developer transferred its interests in vacation homes in US and Mexico, to registrant pursuant to bare trust agreements in consideration of occupancy rights. Developers sold resort points for right to occupy time in vacation homes to point purchasers. Members of registrant, including point purchasers and Developers, paid annual resort fee to registrant, which funded annual costs of registrant, and included vacation home operating costs, costs of operating program, and corporate costs of registrant. Registrant billed point purchaser annually for full amount and developers monthly for portion of fee. Minister of National Revenue assessed registrant in respect of its monthly reporting period for October for each year from 2002 to 2007 on basis that annual resort fee was subject to Goods and Services Tax (GST) as consideration for taxable supply of intangible personal property. Registrant appealed. Appeal dismissed. Registrant was required to pay GST on annual resort fee. There was no agency relationship between registrant and each member in respect of vacation homes expenses. Annual resort fee was paid as consideration for supply of service rendered by registrant to members as registrant agreed to use funds to pay operation costs. Registrant made single supply of services that related directly or indirectly to real property situated outside of Canada, real property situated in Canada, and things other than real property such as operating costs. Since single supply made by registrant related at least partly to things other than real property, place of supply of service was deemed, under ss. 142(1)(g) and 142(2)(g) of Excise Tax Act (Can.), to be made in Canada since registrant performed annual services partially in Canada. GST applied to all of annual resort fee paid by members. Amount assessed by Minister was less than what should have been assessed given that registrant’s net tax for each October included GST on full amount of annual resort fee payable by purchasers who owned resort points on September 30 and GST on one-twelfth of annual resort fee payable by Developers. Canada Revenue Agency used method to determine registrant’s net tax for its October reporting periods that was not consistent with definition of net tax in s. 225(1) of Act and did not comply with ss. 152 and 168 of Act.

Club Intrawest v. R. (June 9, 2016, T.C.C. [General Procedure], Steven K. D’Arcy J., 2012-3401(GST)G) 267 A.C.W.S. (3d) 473.

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