CUSTOMS AND EXCISE |
Excise Tax Act |
Hidden Valley Golf Resort Assn. v. Canada
A-524-98
Sharlow J.A.
13/6/00
15 pp.
Appeal from T.C.C. decision upholding Crown's position amounts payable under appellant's subleases subject to GST --Appellant's leasehold interest in property including residential lots, nine-hole golf course, tennis court and artificial lake (residential lots sublet from 1977 to 2013 on which vacation cottages constructed)--Appeal allowed--Crown argued because GST intended to be broadly based tax, its objectives will be frustrated unless exemption (supply of land used as place of residence for individuals: Act, Sch. V, Part I, s. 7) narrowly construed--Only one principle or approach: words of Act to be read in entire context and in grammatical and ordinary sense harmoniously with scheme, object of Act and intention of Parliament: Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536--Crown also argued tenants also supplied something other than vacation lots: right to use of golf course, club house, artificial lake and tennis court, and GST payable on consideration paid for that other supply--Rent for subleases consist of "annual rent" paid in full in 1977, "maintenance fee" payable annually determined upon costs incurred by appellant in that period in providing services (security, water, lighting, roadways and garbage collection for entire property, and cost of maintaining golf course and other recreational facilities, as well as overhead and capital costs and stipulated markup)--Application of "single supply rule" whereby if service so interdependent and intertwined that cannot sensibly be separated for tax purposes, then Parliament must be taken to have intended they should be treated as single system--Correct to infer from terms of subleases tenants would be unlikely to have agreed to subleases if they did not contain stipulations for various services and access to recreational facilities, and also that recreational facilities would not attract many customers apart from tenants--Only sensible answer to question what did appellant supply to subtenants in return for payments they made: appellant supplied subtenants with vacation lots--Therefore, none of amounts paid to appellant under subleases subject to GST--No basis for application of Act, s. 136(2) to facts of case--Residential leases in apartment complexes frequently include right to services such as security, water, electricity, cable TV, garbage and snow removal, landscaping, and right to use facilities such as swimming pools, exercise rooms and tennis courts, without requiring payment of any amount in excess of stipulated rent--Tax authorities have never taken position GST payable on any part of rent for such apartments--Excise Tax Act, R.S.C., 1985, c. E-15, s. 136(2) (as am. by S.C. 1993, c. 27, s. 15; 1997, c. 10, s. 4), Sch. V, Part I, s. 7.