GST/HST New Housing Rebates – Intention is Critical

GST/HST New Housing Rebates have been subject to audit by the Canada Revenue Agency (“CRA”) consistently for the past few years. If you are buying new construction in the GTA or signed an Agreement of Purchase and Sale within the last few years and have the final closing date coming up, the chances of getting audited are fairly good. If you sold the property shortly after getting title, the chances of getting audited are even greater. The most crucial component of the rebate is intention at the time of signing the Agreement of Purchase and Sale. If you get audited it is important to get proper representation from the beginning to avoid having the file move up the appeal process and assist in bringing your best case forward from the start.

There are a large number of rebate cases currently before the Tax Court of Canada. Many are unsuccessful but may have been successful at an earlier stage had they been advised on what evidence would be beneficial and ought to be obtained. In a recent case (Mendes v. R.) the Tax Court of Canada the entire intention question came down to credibility of the Appellant which was not enough to carry the day. Taxpayers need to bring real, plausible and concrete evidence of intention to move in. For example, touring a local school for your kids in anticipation of a future enrollment, inquiring with contractors or the builder to personalize the home, applying for an expanded transit pass (in some municipalities transit passes cover a specific area), informing your employer etc.

You do not necessarily need to physically move into the residence on a permanent basis in order to qualify for the rebate but at the time of signing the agreement of purchase and sale you must have intended on moving into the property. If you wish to consult a lawyer at our firm or you are being audited on a rebate, please contact 289-201-9348.

Please note our new address: 2150 Islington Ave., Suite 202, Toronto, Ontario.

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