Reeves v The Queen and Applicability of the GST / HST New Housing Rebate


Introduction: What is the GST / HST new housing rebate?

David J Rotfleisch, CPA, JD is the founding tax lawyer of and Rotfleisch & Samulovitch PC, a Toronto-based tax law firm.

As the term implies, the new housing rebate allows an individual to recover part of the GST or the federal part of the HST paid on a newly constructed or substantially renovated house that is used as the individual’s principal residence. or someone close to the individual. , subject to fulfilling other required conditions. Remember that the new housing rebate is not available for a corporation or a partnership.

In Reeves vs. the queen, 2021 TCC 74, the Tax Court of Canada clarified what constitutes a “relationship” under paragraph 254 (2) (b) of the Canadian Act Excise Tax Act. To better understand the Court’s judgment, we will take stock of the facts of the case.

Facts of the Reeves discount case for new housing

In 2015, Ms Reeves wanted to buy land in Brampton, Ont., As the primary residence of her husband and she from the developer, Mattamy. Since her workplace was far from Mattamy’s office, she asked her aunt to sign the buy and sell agreement on her behalf. On August 18, 2015, her aunt went to Mattamy’s office and signed the purchase-sale agreement on behalf of her and her husband. On August 31, 2015, the agreement was amended so that the aunt’s name as the buyer was removed, and the names of Ms Reeves and her husband were added as buyers. However, the aunt’s name was later added as a buyer on April 29, 2017 to help Ms Reeves and her husband secure their desired mortgage financing.

Once the construction of the house was completed on the lot, the purchase transaction closed on May 24, 2017. At closing, Ms. Reeves and her husband held title as roommates to a 99% share of the property. property, while the aunt held title as a common tenant at a 1% share. Shortly thereafter, as the aunt’s name was not required to secure the mortgage financing, the aunt’s name was removed from the title.

On August 8, 2017, Ms. Reeves submitted a new housing rebate application to the Canada Revenue Agency (CRA) requesting a rebate of $ 24,000. Although the request was initially granted, during an assessment on October 13, 2018, the CRA denied the request. Accordingly, Ms. Reeves was assessed for the amount of the refund claimed plus interest of $ 1,941. From the CRA’s perspective, the law required all buyers of property, including the aunt, to meet the conditions for a new housing rebate even though only one buyer could get the rebate. Ms Reeves took the opposite view – that her aunt’s addition to the title was made for the sole purpose of securing the mortgage and that this should not affect her repayment claim. Therefore, the primary issue before the Tax Court was whether Ms. Reeves qualified for the new housing rebate claim she had made.

The law on the new housing discount

To be eligible for the new housing rebate, subsection 254 (2) of the Canada Act Excise Tax Act Provides that:


(a) the builder of a single unit residential complex or condominium unit makes a taxable supply by way of sale of the building or unit to a particular individual;

(b) at the time the individual in particular becomes liable or assumes liability under an agreement of purchase and sale of the assembly or unit entered into between the builder and the individual in particular, the individual in particular acquires the complex or unit for use as the place of primary residence of the particular individual or of a relative of the particular individual . . .

the Minister, subject to subsection (3), pays a refund to the particular individual. . .

To resolve the issue of whether Ms Reeves was entitled to the new housing rebate, Russell J.of the Tax Court referred to an earlier case, R vs. Cheema, 2018 FCA 45. In Cheema, the question was whether a buyer who is a holder only for the purpose of helping other buyers with financing must also fully meet the legal requirements to receive a new housing rebate. The majority court of Cheema ruled that all signatories to an agreement to buy and sell a newly constructed home are required to meet all legal requirements to qualify for a new housing rebate.

Apply the logic of majority decision in Cheema, Russell J. explained that under paragraph 254 (2) (b) of the Excise Tax Act, eligibility for the new housing rebate depends on the individual who acquires the property for use as that individual’s primary residence or as the primary residence of a relative. Since the evidence presented to the court showed that the aunt did not intend to use the property as her principal residence, the question that remained was whether a “niece” qualifies as a relationship for the purposes of the paragraph 254 (2) (b) of the Excise Tax Act.

In order to discern the meaning of the word “relationship”, Russell J. considered the various references to the term in the Income Tax Act. In one of the provisions, people are said to be related by blood, by marriage, by common-law relationship or by adoption. In Ms Reeves’ case, Justice Russell explained that the relevant type of bond between her and her aunt was blood relationship. Let’s move on to a named case R versus Yin Yi Ngai when the Federal Court of Appeal ruled that a blood connection does not extend to that between a nephew and his aunt or uncle, Judge Russell concluded that Ms Reeves is not considered to be a relative of her aunt. Because Mrs. Reeves is not considered a “relative” of her aunt under paragraph 254 (2) (b) of the Excise Tax Act and since the aunt did not acquire the property as her primary residence, not all buyers met the legal requirements. For this reason, Ms. Reeves was not entitled to the new housing rebate.

Professional tax advice

As shown by the Tax Court decision in Reeves vs. the queen, to be eligible for the new housing rebate under paragraph 254 (2) (b) of the Excise Tax Act, the signatory to the purchase and sale agreement must acquire the property to use as a primary residence or the parent of the signatory must acquire the property to use as the relationship’s primary residence. If the bond between the individual and the relationship is a blood relationship, the term relationship has a specific meaning – that is, between siblings, or between a child or a descendant of the individual who has acquired the property. As this case illustrates, a relationship does not include a relationship between an aunt and uncle with their niece (s) or nephew (s).

David J Rotfleisch, CPA, JD is the founding tax lawyer of and Rotfleisch & Samulovitch PC, a Toronto-based tax law firm. Classes. He appears regularly in print, radio and television, and in many blogs.

With over 30 years of experience as a lawyer and chartered professional accountant, he has assisted start-ups, cryptocurrency traders, resident and non-resident business owners and corporations with their tax planning. , with will and estate planning, voluntary disclosures and taxation. dispute resolution, including tax audit representation and tax litigation. Visit and email David at [email protected]

Photo David Rotfleisch courtesy of Rotfleisch & Samulovich PC Read the original version of this article on

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