Case information

Taxation – Statutory interpretation – New housing rebate – Whether the new housing rebate in s. 254 of the Excise Tax Act, R.S.C. 1985, c. E-15, is available to a new home purchaser whose agreement of purchase and sale is co-signed by a third party in order to provide the purchaser with financing assistance, when that third party is not acquiring the new home for use as the primary place of residence for themselves or a relation – Excise Tax Act, R.S.C. 1985, c. E-15, ss. 133, 254(2).

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The Minister of National Revenue reassessed Mohammad Cheema to deny his application for a new housing rebate (“NHR”). The Minister took the position that Mr. Cheema had not met the necessary preconditions for the NHR, as one of the co-purchasers, who was not related to Mr. Cheema, did not intend to occupy the property as his primary place of residence when the agreement of purchase and sale was signed and did not occupy the residence after closing, contrary to the requirements of ss. 254(2)(b) and (g) of the Excise Tax Act, R.S.C. 1985, c. E-15 (“ETA”). On appeal to the Tax Court of Canada from the Minister’s reassessment, Mr. Cheema maintained that the co-purchaser in question signed the agreement for the purpose of facilitating the mortgage financing, and acquired legal title on closing as a bare trustee for Mr. Cheema and his spouse as beneficial owners. As such, Mr. Cheema asserted, the co-purchaser was not a “particular individual” who was required to satisfy the occupancy conditions under the ETA in order for Mr. Cheema to qualify for the NHR.

The Tax Court of Canada set aside the Minister’s reassessment and granted the rebate to Mr. Cheema. The Federal Court of Appeal allowed the Minister’s appeal and restored the reassessment, Webb J.A. dissenting.