Ruling says claimant and his family continued residing in Toronto apartment
The Tax Court of Canada dismissed an appeal of a Canada Revenue Agency (CRA) decision denying a new housing rebate for a condominium townhouse unit in Cambridge, Ontario, upon finding that the appellant failed to establish actual or intended residency there.
In Bhalli v. The King, 2025 TCC 117, the appellant unsuccessfully requested the rebate relating to his and his wife’s purchase of a property on Hardcastle Drive, Cambridge.
On appeal against the CRA’s denial, the issue was whether the appellant intended to occupy the Cambridge property as his family’s primary residence when he agreed to purchase it, as required under s. 254(2)(b) of the Excise Tax Act, 1985.
The appellant testified that he agreed to buy the Cambridge unit in March 2019 during its building phase, closed the transaction in June 2020, and decided to sell the property for $725,000 in April 2021.
The appellant added that he and his family resided in an apartment on Wellesley Street, Toronto, but had no place to live except the Cambridge property from June 2020 to June 2021.
During cross-examination, the appellant alleged that he:
- paid around $1080 in monthly rent for the Toronto apartment throughout the relevant period
- received annual income in the $30,000 range
- began working as a truck driver in 2017, through a trucking corporation he owned that earned gross sales of nearly $70,000
- furnished services for Advanced Trucking Solutions out of Mississauga
The appellant also said his daughter attended Toronto schools throughout the relevant period.
As the respondent, the Crown cited s. 254(2)(g) of the Excise Tax Act, which required the rebate claimant to be the first to actually occupy the unit as the place of residence after its substantial completion.
Rebate denied
The Tax Court of Canada found that the appeal failed. The court ruled that the appellant and his family did not live in the Cambridge property as their primary place of residence and never intended to do so.
The court characterized this case as a contest between the appellant’s lack of credibility and the Crown’s indifference to presenting a proper case.
The court acknowledged inadequacies in the Crown’s case. However, the court took issue with the appellant’s unsupported and unbelievable evidence and endless clarifications to his testimony.
The court disbelieved the appellant’s allegations that his family gave up the Toronto apartment to move to Cambridge in 2020 and then got the apartment back at the same low rent a year later.
Instead, the court determined that the appellant and his family kept living in the Toronto apartment from June 2020 to June 2021 rather than abandoning it. The court said the appellant intended his temporary occupancy of the Cambridge unit to give off an impression of residency.
In concluding that the appellant did not intend to reside in the Cambridge property as a primary residence, the court noted the following.
First, the court pointed out that the appellant failed to provide utility bills or other supporting evidence.
Second, the court held that the appellant lacked the financial resources or means to live in the Cambridge unit as a primary residence. The court said the appellant appeared to have insufficient funds to pay property taxes and utilities after mortgage payments.
The court rejected the appellant’s evidence about additional income from his trucking company. The court noted that the appellant gave contrived testimony and offered no supporting documents regarding this issue.
Third, the court did not believe the appellant’s claims that he would have moved to Cambridge without formally transferring his daughter from the Toronto school system to the Cambridge school system.
Lastly, the court disbelieved the appellant’s explanation that he listed the Cambridge property for sale only months after moving in because his family was depressed. The court noted that neither the appellant’s wife nor daughter testified.
