September 23, 2021

FEDERAL INCOME TAX – Whether it is a business – Capital gains and losses – Principal residence

Appeal by the taxpayer from a decision of the Tax Court dismissing his appeal for reassessments. The appellant, a real estate agent, bought three houses, demolished them, built new houses and then sold them between 2004 and 2010. He was reassessed under the Income Tax Act on the grounds that the gains made on the disposition of such property were as income. He was assessed for the GST / HST on the basis that the supplies of the goods were taxable supplies. The appellant claimed to have 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 sale of the property. The Tax Court judge did not find the appellant to be a credible witness. The judge found that the appellant did not usually live in any of the three houses for any period of time, but sold them in the course of carrying on a business, adventure or adventure. business of a commercial nature. The Tax Court judge found that the appellant was the builder of the residential projects for the purposes of the Excise Tax Act. As no other person was identified by the appellant as a resident of the houses, the Tax Court judge concluded that the appellant could not avail himself of the exemption from GST provided by s. 3 of Excise Tax Act.

DECISION: Appeal dismissed. The appellant was engaged in a business, adventure or business of a commercial nature when he had the three houses built. He has not established that the Tax Court judge erred, much less palpable and overriding, with respect to any of the other findings of fact made on the basis of the evidence presented to the audience. The evidence which supported the appellant’s assertion that he occupied the houses as his principal residence was counterbalanced by the evidence which contradicted this assertion. Therefore, it was not exempt from GST either.

Wall c. Canada, [2021] FCJ No. 691, Federal Court of Appeal, WW Webb, DG Near and JB Laskin JJ.A., July 2, 2021. Reports No. TLD-August22021007

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