Clients who seek to claim the New Housing Rebate must demonstrate that they intend to occupy the property purchased as a primary place of residence, or risk losing the rebate, which can be as much as $24,000, according to a recent decision from the Tax Court of Canada (TCC).
The May decision dealt with an appellant, Fanjin Yu, who purchased six new homes in and around Toronto between 2008 and 2011, despite an annual income of less than $20,000. Rebates were claimed and paid for all of the homes, five at the maximum level.
The Minister of National Revenue paid and then disallowed the $24,000 rebate for one of the homes “because neither the appellant nor a relative of the appellant intended to occupy the property as a primary place of residence,” the May decision states.
Yu testified at trial that the home had been purchased for her retired parents and that they had intended to live there on a permanent basis when they moved to Canada from China near the end of 2012. Evidence included the shipment of 34 packages of household items and furniture from China as well as the purchase of household items, such as window coverings and an air conditioner.
Yu also testified that three payments of $50,000 each were made by the parents to pay for the property earlier in 2012, although no supporting evidence was supplied.
However, the TCC concluded that Yu’s parents had not intended to move to Canada, but only to visit while the appellant went through a divorce. No immigration papers were filed for the parents and medical insurance was obtained through a one-year, private policy.
In May 2013, the appellant’s father suffered a heart attack and had to wait for seven hours to see a doctor in an emergency ward. Shortly after that event, the appellant’s parents both returned to China, to the home that they had retained during their stay in Canada.
Yu argued that the parents changed their original plans and returned to China, “where they are more at peace considering the condition of their health,” the decision says.
However, evidence showed that very little water or power was consumed at the home during the parents’ time in Canada, suggesting that the parents had not lived there, but with their daughter and grandchildren.
The home, which had been purchased in 2011 for $588,000, according to government evidence, was sold about a month after the parents’ departure in 2013 for $870,000.
The TCC concluded that Yu had not met the condition in sec. 254(2) of the Excise Tax Act, which provides that applicants for the New Housing Rebate must prove that the home will be the claimant’s “primary place of residence” or the residence of a “relation.”
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