Tax Court of Canada


Goods and Services Tax


Textual analysis and case law supported developer’s argument that land was element in constructing condominium complex

Ontario transitional new housing rebate. Registrant developer purchased land and commenced development of condominium complex that met definition of specific residential complex in s. 55(1) of New Harmonized Value-added Tax System Regulations, No. 2. Ontario transitional new housing rebate offset estimated embedded Ontario Retail Sales Tax (RST) in housing construction costs prior to July 2010 where housing would be sold after that date and be subject to Harmonized Sales Tax (HST). Developer applied for transitional rebate, calculated by multiplying estimated provincial levy by percentage of 50 per cent on basis that construction of development was between 25 and 50 per cent completed, when including cost of land in calculation. Minister of National Revenue reduced rebate by applying 25 per cent rebate rate because development was between ten and 25 per cent complete, when excluding cost of land in calculation. Developer appealed, and brought motion to determine question of whether developer’s cost of land should be included in calculation of percentage of completion of construction of its condominium complex in respect of transitional rebate pursuant to s. 256.21(1) of Excise Tax Act. Motion granted. Cost of land was factor in calculating degree of completion of construction of condominium complex to determine transitional rebate entitlement. Textual analysis and case law supported developer’s argument that land was element in constructing condominium complex. Contextual and purposive analysis was more ambiguous but wording of provisions was not ambiguous enough to have Minister’s arguments on absurdity and windfall succeed. Canada Revenue Agency’s opinion that land was not factored in to calculation of percentage completion of development was dated before judgment where court held that constructing residential complex included land.

Metrogate Inc. v. The Queen (2018), 2018 CarswellNat 2287, 2018 TCC 91, Réal Favreau J. (T.C.C. [General Procedure]).

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