Canada v. Sentinel Self-Storage Corp.
A-201-96 / A-202-96
Linden J.A.
28/11/96
8 pp.
Whether respondents should have collected GST in respect of $10 forfeited discount in rental fees paid by defaulting tenants of self-storage facilities-Act, s. 165(5) requiring every recipient of taxable supply pay 7% GST where "supply" defined as provision of property or service in any manner, including rental or lease-Customer paying rent for storage facility on or before due date paid monthly charge less prompt payment discount ($10), while renter paying after due date paying full monthly charge-Appeal from Tax Court Judge's finding $10 increase in fees paid by defaulting tenants not part of monthly rental charge, but rather fee paid by them to compensate respondents for action taken to try to collect late payment and thus exempt from taxation-Appeal allowed-First, agreement created two-tiered pricing arrangement on basis of time of payment, not credit arrangement for overdue payment of monthly charge-No evidence of actual costs of collecting payment-Furthermore, Agreement providing respondents with independent right to recover costs from overdue renters-Second, if Parliament had intended to exclude late payment penalties and prompt payment discounts in relation to supply of real property, it would have so specified-Third, payment of full monthly charge not financial service relating to operation of overdue account, simply higher monthly fee charged to overdue renters in effort to encourage timely payment-Finally, similarity between instant cases and Acme Video Inc. v. The Queen (1995), 3 GTC 2110 (T.C.C.), where additional charges to renters for overdue videotape characterized as taxable supply-No costs should have been awarded below as Tax Court of Canada Act limits award of costs to cases where taxpayer's appeal results in tax reduction by more than half and disputed amount less than $7,000-Excise Tax Act, R.S.C., 1985, c. E-13, s. 165(5) (as enacted by S.C. 1990, c. 27, s. 12).