Executive Summary: Key Legal and Evidentiary Issues

• Amith Nagendra's GST/HST New Residential Rental Property Rebate (NRRPR) application was filed two months beyond the statutory two-year deadline under subsection 256.2(7) of the Excise Tax Act.

• Neither the Appellant nor a relation first occupied the property, disqualifying him from the initially claimed New Housing Rebate (NHR) and triggering a $29,410.10 assessment.

• Subsection 296(2.1) of the ETA, which compels the Minister to apply unclaimed rebates against amounts owing, was found inapplicable because the NRRPR Assessment did not assess an amount payable under Part IX.

• The "Total Balance" and "arrears interest" appearing on the NRRPR Assessment originated from the earlier NHR Assessment and did not constitute a separate assessment engaging subsection 296(2.1).

• Estoppel arguments failed as the Minister's earlier subsection 296(2.1) review related to the NHR application, not the NRRPR, and the Appellant never responded with the required information in time.

• Parliament chose not to extend the subsection 256.2(7) deadline despite COVID-19, and the Court confirmed it had no discretion to override that legislative choice.

Background and purchase of the property

In May 2016, Amith Nagendra entered into an agreement of purchase and sale with McClung Estates Ltd. to buy a residential property in Caledonia, Ontario. He took possession and ownership on July 11, 2018. Rather than occupying the property himself, Nagendra leased it to tenants beginning August 1, 2018. This distinction between personal occupation and rental use would prove central to the tax rebate issues that followed.

The initial New Housing Rebate application and its denial

Shortly after taking possession, on August 16, 2018, Nagendra applied for a GST/HST New Housing Rebate (NHR) in respect of the property. The NHR under section 254 of the Excise Tax Act is available to individuals who purchase a new home and personally occupy it, or have a relation do so. Because neither Nagendra nor a relation was the first to occupy the property, the Minister of National Revenue disallowed the NHR by a notice of assessment dated November 5, 2019, and assessed Nagendra for an amount owing of $29,410.10, which included arrears interest. This amount arose because the builder, McClung Estates Ltd., had already credited the Appellant with a NHR of $27,169.95 in respect of the property. Since Nagendra was not entitled to this rebate, the credited amount became recoverable under subsection 264(1) of the ETA. Notably, Nagendra never objected to the NHR Assessment.

The late NRRPR application

Instead of challenging the NHR Assessment, Nagendra filed a separate application in September 2020 for a GST/HST New Residential Rental Property Rebate (NRRPR) under section 256.2 of the ETA — a rebate designed for purchasers of new housing who acquire the property for rental purposes rather than personal use. However, under subsection 256.2(7) of the ETA, this application had to be filed within two years after the end of the month in which tax first became payable. Since tax became payable on July 11, 2018, the deadline was July 31, 2020. Nagendra's September 2020 filing was two months late. By a notice of assessment dated November 3, 2020, the Minister disallowed the NRRPR on the basis of the missed deadline. Nagendra objected and then appealed to the Tax Court of Canada.

The Appellant's argument under subsection 296(2.1)

The core of Nagendra's appeal rested on subsection 296(2.1) of the ETA, which requires the Minister, in certain circumstances, to apply an unclaimed rebate against net tax or an overdue amount even if the limitation period for claiming the rebate has expired. Nagendra argued that this provision should compel the Minister to accept his late NRRPR application. The Court, however, found that subsection 296(2.1) can only be engaged when the assessment in question either assesses net tax for a reporting period or assesses an amount payable under Part IX of the ETA. The NRRPR Assessment was neither. It was simply a denial of the rebate application under subsection 297(1) and did not assess any amount payable by the Appellant.

The "Total Balance" and arrears interest on the NRRPR Assessment

Nagendra also pointed to a "Total Balance" of $30,631.10 appearing on the NRRPR Assessment, comprised of a "Prior Balance" of $30,547.53 and arrears interest of $83.57, arguing this demonstrated an amount payable that would trigger subsection 296(2.1). The Court rejected this, explaining that the "Prior Balance" originated from the earlier NHR Assessment and was not assessed at the time of the NRRPR Assessment. Relying on the Pure Spring Co. Ltd. decision, the Court held that this prior balance was not an amount that became payable by virtue of the NRRPR Assessment. Similarly, the $83.57 in arrears interest was merely the accrual of interest on the unpaid NHR Assessment amount and, following the reasoning in McFadyen, did not constitute a separate assessment arising by virtue of the NRRPR Assessment.

Estoppel and the Minister's earlier review

Nagendra further argued that the Minister had initiated a subsection 296(2.1) review during the NHR application process and should therefore not be allowed to invoke the two-year limit with respect to his NRRPR application. The evidence showed that on September 25, 2019, the Minister had written to Nagendra highlighting his possible eligibility for the NRRPR and requesting a list of information to determine his eligibility. When Nagendra did not respond, the Minister wrote again on November 1, 2019, advising that no NRRPR amount would be applied against the NHR Assessment but that Nagendra might still be eligible for the NRRPR, provided that an application was made within the time limit. The Court agreed that a subsection 296(2.1) review was initiated, but emphasized it was in connection with the NHR application. The Minister was not required to blindly allow the NRRPR without the prescribed information, and was not obligated to wait indefinitely for the Appellant to respond. As noted by the Court in Zdzieblowska, the NHR and NRRPR applications require different prescribed forms containing different information.

COVID-19 and the absence of discretion

Nagendra cited the COVID-19 pandemic as a reason for his late filing. While the Court had no reason to doubt the Appellant's explanation of how the pandemic impacted his ability to file on time, it noted that Parliament, through the Time Limits and Other Periods Act (COVID-19) and the Order Respecting Time Limits under the Excise Tax Act (COVID-19), had chosen not to extend the deadline under subsection 256.2(7) of the ETA. The Court confirmed it had no discretion to change that.

Ruling and outcome

Associate Judge Andrew Miller dismissed the appeal without costs on March 10, 2026. The Court concluded that the NRRPR application was filed beyond the two-year period provided in subsection 256.2(7) of the ETA, and subsection 296(2.1) could not remedy that failure, as the NRRPR Assessment was an assessment under subsection 297(1) denying the NRRPR application. The Respondent, His Majesty the King, was the successful party. No specific monetary amount was awarded in this ruling; rather, the assessment disallowing the Appellant's NRRPR application was upheld. The Court also observed that had the Appellant objected to and appealed from the NHR Assessment, he may have been entitled to raise subsection 296(2.1) as a basis for reducing the NHR Assessment based on the NRRPR — however, the Appellant did not do so, and the only assessment before the Court was the NRRPR Assessment.