This case involved a claim for the landlord’s GST rebate for new residential rental property. Ms. Tsenkova got it, even though her lease was for “temporary accommodation”.
Under ETA s. 256.2, if you pay GST when you buy a new home, you may claim a GST/HST rebate if you plan to use the home or part of it to lease to residential tenants and the lease will be for “at least one year”. (The rules are more detailed but that is the gist. To get the rebate, you must apply within 2 years after the month you buy the property. See the comment on Napoli v. The Queen, (2013 TCC Paris).)
In this case, Ms. Tsenkova bought a new home in December 2010. Later that month, she signed a lease to rent the home for a year to a rental agent, Premier Executive Suites. The lease said that “the intention of the Tenant is to sub-let the premises to corporate executives for the purpose of providing temporary accommodation”. (Para. 3).
Those facts suggest that the first use of the home would not be as a residence for an individual for at least one year, given that “temporary accommodation” implies short-term occupancy for less than a year. But, as ever, the facts were a little more involved.
Justice Sheridan relied on an earlier decision of Webb J. (who is now on the Federal Court of Appeal) for the principle that “it is the expectation in respect of the first use of the unit at the time the GST is paid that is relevant for determining whether ‘… one individual throughout the period of one year … uses the unit as his or her primary place of residence…'” (Para. 5)
Applying that principle, Justice Sheridan also accepted Ms. Tsenkova’s evidence that when she bought this investment property and signed the lease, Premier had agreed to get a tenant who would stay in the property for at least a year. And in fact, “Premier Executive Suites secured a tenant who agreed to use the Unit continuously as his/her primary place of residence for at least one year.” And the tenant was still living in the property almost three years later.
With those favorable facts, Justice Sheridan disregarded the “temporary accommodation” words in the Premier lease agreement and allowed Ms. Tsenkova her rebate.
(This case also shows that for some tax disputes, you needn’t call many witnesses. Ms. Tsenkova, who was self-represented, was the only witness but Justice Sheridan found her evidence was “well-organized, credible and remained unshaken on cross-examination.” See para. 7.)