As many do, the new home buyer in this case added a friend’s name to the agreement of purchase and sale and to the title for the home, to help get bank mortgage financing. The friend never intended to live in the building and never did. So, the TCC confirmed the CRA’s decision to refuse the appellant’s claim for the rebate.
But in a note to her reasons, the TCC judge added:
“[2] … Respondent counsel also argued, in response to appellant counsel’s submission, that if the appellant is only seeking the provincial portion of the Rebate, the proper forum to seek such relief lies with the Superior Court of Ontario. I agree with respondent counsel that, in those circumstances, the Tax Court does not have the jurisdiction relating to the provincial portion.”
This opinion completely mis-states the GST law. The rebate is not available under provincial law. It arises under s. 256.21 of the ETA. Although the rebate is offered based on agreement with Ontario, it, like the HST, is imposed under the federal law and administered by the CRA.
The framework for HST in Ontario is set under the Comprehensive Integrated Tax Coordination Agreement Between The Government of Canada and The Government of Ontario. Part IX, “Harmonized Tax Administration”, says that CRA “will administer and enforce the harmonized sales taxes payable under Part IX of the Excise Tax Act, which includes the rebates under Annex “B”…” And under Part XIII, “Litigation”, “Canada will be responsible for the conduct of litigation in respect of the harmonized sales taxes.”
Annex “B” of the Agreement, “Provincial Flexibility in respect of Rebates”, says:
“9. Where the Province advises Canada of its desire to offer a rebate of the PVAT paid in respect of new housing, new rental housing or land for residential use, as contemplated in Part IX of the Excise Tax Act, the Parties agree that the Province will be permitted to designate the rate of the rebate of the PVAT in respect of the Province payable in respect of that new housing, new rental housing or land for residential use, the threshold amount in respect of which such a rebate will apply, including the phasing-out (if any) of such a rebate, and the maximum amount of such a rebate that may become payable if all other variables in respect of the proposed rebate payable in respect of that new housing, new rental housing or land for residential use, including all administrative, structural and definitional parameters, match the framework and rules set out in Part IX of the Excise Tax Act in respect of a CVAT rebate for that new housing, new rental housing or land for residential use.
“10. On and from the Implementation Date, subject to the definitions under Part IX of the Excise Tax Act and unless otherwise amended in accordance with the Agreement, the Parties agree that the applicable rates, thresholds, phasing-outs and maximum amounts of the PVAT rebates payable in respect of certain new housing, new rental housing or land for residential use, as permitted under clause 9, will be as follows:
(a) the rebate rate will be 75% of the PVAT;
(b) the rebate will apply without a phase-out;
(c) the maximum amount of a rebate will be $24,000; and
(d) notwithstanding paragraph (c), the maximum amount of a rebate may be less than $24,000 if the rebate claimant has not paid PVAT on both land and the building portion of housing.”
Thus, if you object to the provincial component of the HST or to any specific rebate, your remedy is not found in provincial Court, which has no jurisdiction. You go to the TCC.
(See also Tax Court of Canada Act, s. 12:
“12. (1) The Court has exclusive original jurisdiction to hear and determine references and appeals to the Court on matters arising under the Air Travellers Security Charge Act, the Canada Pension Plan, the Cultural Property Export and Import Act, Part V.1 of the Customs Act, the Employment Insurance Act, the Excise Act, 2001, Part IX of the Excise Tax Act, the Income Tax Act, the Old Age Security Act, the Petroleum and Gas Revenue Tax Act and the Softwood Lumber Products Export Charge Act, 2006 when references or appeals to the Court are provided for in those Acts.”)
When you apply for the “Ontario” new housing rebate, CRA is obliged to assess your application under ETA s. 297 and once you have that assessment you have the normal objection and appeal rights under ss. 301 and 306.
The TCC judge also made this comment about trusts, asserting a need for written documentation:
“[27]… The creation of a trust must be properly documented containing the requisite elements of a trust, dated, signed and in existence prior to or contemporaneous with the matter that is the subject of the trust arrangement. Based on the evidence, I find that no trust arrangement was in existence at the relevant time and, therefore, it is unnecessary for me to consider this further.”
It is not true to say that trusts must be written in order to be valid. Oral declarations of trust are well-recognized as binding commitments of the trustee. That said, the judge may have meant to say that she did not believe the oral testimony of the appellant as to the creation of the trust.