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FEDERAL INCOME TAX - Whether a business - Capital gains and losses - Principle residence

Friday, August 06, 2021 @ 12:30 PM  


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Appeal by the taxpayer from a Tax Court decision dismissing his appeal from reassessments. The appellant, a real estate agent, purchased three houses, demolished them, constructed new houses and then sold them between 2004 and 2010. He was reassessed under the Income Tax Act on the basis that the gains realized on the disposition of these properties were on income account. He was assessed for GST/HST on the basis that the supplies of the properties were taxable supplies. The appellant claimed he acquired the properties as a place of residence for himself and his son. He also testified that he occupied each property for a period prior to the property being sold. The Tax Court judge did not find that the appellant was a credible witness. The judge found the appellant did not ordinarily inhabit any of the three homes for any period but sold the houses while carrying on a business or an adventure or concern in the nature of trade. The Tax Court judge found that the appellant was the builder of the residential complexes for the purpose of the Excise Tax Act. Since no other person was identified by the appellant as a resident of the houses, the Tax Court judge concluded that the appellant could not rely on the exemption from GST provided by s. 3 of the Excise Tax Act.

HELD: Appeal dismissed. The appellant was engaged in a business or an adventure or concern in the nature of trade when he had the three houses constructed. He failed to establish that the Tax Court judge made any error, let alone a palpable and overriding error, with respect to any of the other findings of fact that were made based on the evidence that was presented at the hearing. The evidence that supported the appellant’s assertion he occupied the homes as his principal residence was outweighed by the evidence that contradicted this assertion. As a result, he was also not exempt from GST.

Wall v. Canada, [2021] F.C.J. No. 691, Federal Court of Appeal, W.W. Webb, D.G. Near and J.B. Laskin JJ.A., July 2, 2021. Digest No. TLD-August22021007