Appeal Dismissed: Builder Status for GST Determined by Trade Intent

OUTCOME: Dismissed

Docket: 2025-2986(GST)I BETWEEN: [APPELLANT] Appellant, and HIS MAJESTY THE KING, Respondent, Appeal heard on May 11, 2026, at Vancouver, British Columbia Before: The Honourable Mr. Justice Randall S. Bocock Appearances : For the Appellant: [redacted] Counsel for the Respondent: [redacted] NOW THEREFORE THIS COURT ORDERS THAT:

1. The appeal of the assessment dated August 8, 2024, made under the Excise Tax Act , for the reporting period July 1, 2017 to September 30, 2017, is dismissed; and, There shall be no costs. Signed at Edmonton, Alberta this 25 th day of June, 2026. “[NAME].[NAME]. [NAME]” [APPELLANT] J. Docket: 2025-2985(GST)I BETWEEN: [APPELLANT], Appellant, and HIS MAJESTY THE KING, Respondent, Appeal heard on May 11, 2026, at Vancouver, British Columbia. Before: The Honourable Mr. Justice Randall S. Bocock Appearances : For the Appellant: [redacted] Counsel for the Respondent: [redacted] NOW THEREFORE THIS COURT ORDERS THAT: The appeal of the assessment dated August 8, 2024, made under the Excise Tax Act , for the reporting period July 1, 2017 to September 30, 2017, is dismissed; and, There shall be no costs. Signed at Edmonton, Alberta this 25 th day of June, 2026. “[NAME].[NAME]. [NAME]” [NAME] J. Citation: 2026 TCC 117 Date: 20260624 Docket: 2025-2986(GST)I BETWEEN: [APPELLANT], Appellant, and HIS MAJESTY THE KING, Respondent, and Docket: 2025-2985(GST)I BETWEEN: [APPELLANT] Appellant, and HIS MAJESTY THE KING Respondent, Appeal heard on May 11, 2026, at Vancouver, British Columbia. Before: The Honourable Mr. Justice Randall S. Bocock Appearances : For the Appellant: [redacted] Counsel for the Respondent: [redacted] [ 1 ] [NAME]. [APPELLANT] are each other’s spouse. They each owned one-half of a house they built at 17036 57 th Ave., Surrey, British Columbia ( “57 th Ave.” ) The Minister reassessed each for one-half of Goods and Service Tax ( “GST” ) collectible by notice dated August 8, 2024, (the “GST assessment” ) exigible on a purchase price of $1,668,800.

Accordingly, these appeals were heard at the same time on common evidence. [ 2 ] The Minister asserts that [NAME]. [APPELLANT] were: [ 3 ] “[NAME]” within the meaning of 123(1) of the Excise Tax Act (“ETA” ); a) the first to occupy 57th Ave; b) were deemed to make a taxable supply in September 2017 of $1,666,666.67 under subsection 191(1); and, c) were not exempt from GST under subsection 191(5) on the self-supply because the Appellant (or family members) did not use 57th Ave. as a primary residence but instead held it primarily on account of inventory and intended to sell it at a profit.

II. THE LEGAL TEST [ 4 ] The critical issue is whether [NAME]. [APPELLANT] “carried on a business or engaged in an adventure in the nature of trade” when acquiring and constructing 57 th Ave. If they were, then each would be a “[NAME]” within the meaning of subsection 123 of the ETA. That section, when excerpted to this situation, provides that a person during ownership who constructs (or has someone on the person’s behalf construct) a residential unit ( “house” ) is a [NAME] except where the person constructs the house for a purpose which is not “in the course of a business or an adventure in the nature of trade” : [NAME] v. [NAME] , 2021 FCA 132 at paragraph 23. “[NAME]” of a residential complex […] means a person who (a) at a time when the person has an interest in the real property on which the complex is situated, […] engages [NAME] to carry on for the person […] (iii) […] the construction […] of the complex, […] but does not include (f) an individual described by paragraph (a) […] who […], (ii) engages [NAME] to carry on the construction […] for the individual […] otherwise than in the course of a business or an adventure or concern in the nature of trade, [ 5 ] By precise reference to the relevant statute, if [NAME]. [APPELLANT] are engaged in the business of construction 57 th Street, then they are [NAME] as defined in section 123 of the ETA: [ 6 ] The controlling tests measuring the “business” versus a purely “capital disposition” purpose are utilized by applying the facts to the following factors ( [NAME] , supra , at paragraph 24 referencing [COMPANY] . v. MNR [1986] CTC 259 (FCTD)): [24] Therefore, the critical issue in this appeal is whether Mr. [NAME] was engaged in a business or an adventure or concern in the nature of trade when he had the three houses constructed. Neither party disputed that the tests to be considered in determining whether a gain realized on a disposition of property is an income gain or a capital gain are as set out in [COMPANY] v. Minister of National Revenue, [1986] 2 C.T.C. 259, 86 D.T.C. 6421 (F.C.T.D.): the nature of the property sold; the length of the period of ownership; the frequency or number of similar transactions; work expended on or in connection with the property; the circumstances that were responsible for the sale of the property; motive. [ 7 ] The facts [NAME] will reveal the ultimate intention of the [NAME] throughout: [NAME] v. Canada 3 SCR 103 at paragraphs 16 and 17.

III. THE SEQUENTIAL FACTS [ 8 ] Since the facts are determinative in this appeal the Court must determine, analyze and weigh such facts for acceptance or rejection of their intention regarding 57 th Ave. [ 9 ] The critical facts gleaned from the evidence of [NAME]. [APPELLANT] and their daughter, and the evidence before the Court may be summarized in the paragraphs which follow. [ 10 ] [NAME]. [APPELLANT] purchased 57 th Ave., a severed, vacant lot on March 15, 2016, for $522,500.00. At the time, Mr. [APPELLANT] was a long-distance truck driver, away from home frequently for days at a time. The 2 [APPELLANT] children lived at home and pursued post-secondary education. The 57 th Ave. was purchased to be built as a permanent family home. At the hearing [NAME]. [APPELLANT] testified through an interpreter. Their daughter also testified in English. The details of 57 th Ave. [ 11 ] The dwelling at 57 th Ave. was grand. Not just two stories with a finished basement, it also included nine bedrooms and nine bathrooms, including a separate stand-alone unit containing its own household appliances. The basement had a high ceiling living room, media room, study and a wet bar. [ 12 ] To construct this large 5,650 square foot house at 57 th Ave. the [NAME] followed the usual process. They obtained an original building permit in August 2016. A revised building permit was issued on November 10 of the same year to address a 200-year flood plain issue. Between November 2016 and September 2017 construction commenced and was completed, when the final building approval was issued on September 28, 2017. Possibly best house in a bad neighbourhood [ 13 ] Mrs. [APPELLANT] testified that 57 th street was a beautiful house in a suspect neighbourhood. Two problems occurred involving other properties in the neighbourhood. First, across the street a person was murdered on March 16, 2017: of note, this date falls within the construction phrase of 57 th Ave. Screen shots of live news coverage were tendered. Second, according to testimony of Mrs. [APPELLANT] and her daughter the neighbours living across the street in what appeared to be the same house were [NAME]. As importantly, they harassed the [APPELLANT] family, littered 57 th St. and threatened the son of Mrs. [APPELLANT]. Attempts to overcome difficulties [ 14 ] Mrs. [APPELLANT] and her daughter described their collective efforts to address the neighbourhood disturbances. These include: a) complaining to the [NAME]; b) handwritten notices written by Mrs. [APPELLANT] were delivered to the unruly neighbours; and, c) the [NAME] reduced the presence of their children at 57 th Ave. to the point where Mrs. [APPELLANT] was to only inhabitant, and some nights not even her; It is noted that none of the Police, by-law reports nor the handwritten notes were produced in Court. Part time dwellers in order to cope [ 15 ] As seen, the [NAME] family addressed the undesirable location by rarely living at 57 th Ave. The daughter, who also testified, could not study; frequently, she needed to stay with relatives to do so. She felt the entire family was unhappy because of the noise, disruption, litter and threats. The stress heightened because of Mr. [APPELLANT]’s work absences. This singularly led to discarding of the notion of 57 th Ave. as a family house, and its ultimate sale. Sale and relocation [ 16 ] On June 8, 2018, 9 months after completion of 57 th Ave., [NAME]. [APPELLANT] purchased their present residence at 184 th Street, Surrey ( “184th St” ). On May 5, 2019, they listed 57 th Ave. for sale on sold it in 60 days or so later. On June 28, 2019, [NAME]. [APPELLANT] moved out of 57 th Ave. and it was sold on July 2, 2019, for $1,650,00.00. Mathematically, they yielded a $310,375.00 profit from the sale of 57 th Ave. [NAME]. [APPELLANT]’s real estate history covers a lot of geography [ 17 ] Of interest is [NAME]. [APPELLANT]’s history of purchased and sold properties in the Vancouver area during the past 20 years. In testimony they also provided an explanation of the purpose and justification for each purchase and sale. A summary of the details of those transactions and asserted purposes is illustrated in the chart below: Property # Property Address Buy Date Buy Price (Rounded) Sale Date Sale Price (Rounded) Summarized Explanation 1 143 rd Street, Surrey Mar. 19, 2002 190 K Aug. 28, 2003 223 K Very tiny house, children born there; also lived with parents and brother, more required. [ADDRESS], Surrey Feb. 26,2004 290 K Sept. 14, 2006 756 K Moved in with parents to assist with children; effectively demolished and rebuilt dwelling. 3 143B Street, Surrey Jan. 30, 2006 210 K Aug. 28, 2013 672 K Vacant lot, constructed house; obtained owner/[NAME] licence. 4 98 Avenue, Surrey Jul. 8, 2011 340 K May 15, 2013 450 K Solely investment property; rented; tenants destroyed it. 5 76 th Avenue, Surry Jul. 17, 2013 510 K Jul. 23, 2017 1.955 K Constructed house, obtained owner / [NAME] licence. 6 57 th Avenue, Surrey Mar. 15, 2016 522 K July 2, 2019 1.650K Subject property; no owner/[NAME] license 7 28B Avenue, Surrey Jul. 29, 2016 590 K Jan 30, 2018 706 K Purchased 4 months after 57 th St. Investment Property 8 184 th Street, Surrey Jun. 8, 2018 980 K [NAME] [NAME] residence 9 48 Avenue, Langley Oct. 30, 2019 1.375 K [NAME] [NAME] property 10 Roper Ave., White Rock April 15, 2021 1.225 K [NAME] [NAME] As an investment for children’s future 57 th Ave. Custom made and then some [ 18 ] [NAME]. [APPELLANT] have, without exception, resided at 184 th Ave. since their move there in 2018. They argue 57 th St. and 184 th Ave. are synonymous, if not identical. Neither involved an intention to carry on the acquisition of the land and construction of the dwelling at 57 th in the course of carrying on a business or an adventure or concern ( “undertaking” ) in the nature of trade.

IV. APPLICATION AND ANLAYSIS OF FACTS TO THE FACTORS On which side of the “Happy Valley” test does 57 th Ave. fall on? [ 19 ] [ADDRESS] applies below the facts before it to the Happy Valley factors to determine whether [NAME]. [APPELLANT] engaged in a business, or perhaps more appropriate in the circumstances, an undertaking in the nature of trade concerning 57 th Ave. Nature of the 57 th Ave. when sold [ 20 ] In the sale listing, 57 th Ave. was described as “LOOKS LIKE, BRAND NEW, AND NEVER LIVED IN” . This factor suggests a readily marketable property suitable for multi-generational families or rented short-term accommodation rather than a “new forever home” of a family of four. [ 21 ] At that time, the house was a stellar, 5,600 square foot, massive 9 bedroom, 9 bathroom dwelling with multi-purpose social rooms, a separate 2-bedroom living unit with laundry all of which comprised the floor plan of this “permanent home” for four people, two of whom were possibly to leave home in the subsequent decade and start their own family, much as their own parents testified they ultimately did. This evidence collectively gravitates towards the “trade intention” . Length of period of ownership [ 22 ] The length of ownership was just over 3 years. The length of habitable occupancy was one-year because of the 24 months of construction. This factor is neutral. Frequency or number of similar transactions [ 23 ] The chart in paragraph 16 above describes a purchase of 8 properties in 16 years, one every two years. Even discounting the asserted investment purpose of 2 of these properties, the balance of the history yields a noticeable pattern of residence rotation. This factor supports a “trading” habit and purpose. Work expended on 57 th Ave. [ 24 ] The magnificent house was constructed from scratch on a vacant lot. The scope, type and quality of improvements tell the story. Consequently, all told, the improvements, assigned their best interpretation for [NAME]. [APPELLANT], suggest one foot in both camps: and intention “to trade” versus to “occupy [NAME]” long term as an august showpiece. Given the nature of the residence viewed objectively through likely occupants, the trading option versus long term self-occupation seems more supportable by the facts. Circumstances causing sale [ 25 ] There are two possible reasons. One, an overbuilt house in a bad neighbourhood: 76 th Ave. Two, the purchase of a lot for a more appropriately sized and purposed “forever home” : 184 th St. No detailed evidence of 184 th St., the present home, was furnished for the Court for any comparison to be made. So as not to discount rashly the heartfelt, but self-serving, largely uncorroborated, evidence of the character of the 76 th Ave. neighbourhood, the Court concludes this factor is neutral; such a neighbourhood, to the extent accurately described, is neither helpful for “trading” nor long term occupation of the property. Motive [ 26 ] [NAME]. [APPELLANT] were either extremely timely in sequencing their property purchases and sale or more savvy than divulged. Their purchase of vacant lots, construction, occupation and/or sale and yielded “surplus” after sale, glides together nicely upon an intention to profit from outset to conclusion. [ 27 ] With 76 th Ave. there was also heightened hallmarks of a motive to profit rather than reside: no owner/[NAME] license was obtained unlike properties 3, 5 and 8; the taxable, multi-purpose, oversized to a personal use purpose, layout and facilities; and the staged, pristine and neutrally decorated interior of the asserted “forever home” . Clear evidence is the selling listing agreement [NAME]. [APPELLANT] signed which in upper case introductory-script touts and brandishes, as described above, the never lived in state of the pristine multi-family home.

V.

CONCLUSION, SUMMARY AND [NAME]. [APPELLANT] are “deemed” [NAME] under the ETA [ 28 ] The evidence when applied to the [NAME] factors leads unwaveringly to a finding, on balance, that [NAME]. [APPELLANT] carried on the construction of 57 th Ave. in the course of “an adventure or concern in the nature of trade ” . The evidence and testimony offered to prove “otherwise ” as embodied in the text of the section is simply not as convincing as that of the “trade” purpose when the [NAME] factors are weighed. Hence, [NAME]. [APPELLANT] were [NAME] within the definition of s. 123 of the ETA. [NAME]. [APPELLANT], because of their everyday understanding of a commercial house [NAME] balked at possibly being so defined. [ADDRESS] explained that such “everyday” understanding was not incorrect but needed to be broadened in this instance because of the very specific ambit of the s. 123 ETA definition and the possible inclusion within it, because of the purpose of the section, of [NAME] such as [NAME]. [APPELLANT]. [NAME] occupation exemption for self-supply also not available [ 29 ] Further, the [NAME] “exception by occupation as a primary residence” under sub-paragraph 191(1)(b)(iii) and subsection 191(5) is not available to [NAME]. [APPELLANT]. Embedded in the analysis above is the same sinew upon which the Court now also concludes there is little or no objective evidence of primary residence occupation, [NAME] or not. Also, absent was the usual tendered evidence: moving receipts, driver’s licences and health cards, furniture delivery receipts and the like. In contrast, the staged “celebration cake lighting” pictures do not help; the absence from the property of most family members for the bulk of the habitable occupancy period does not help; and, the pristine, showcase photographs proffered by Mrs. [APPELLANT] of the residence do not help; immaculate orderliness belies permanent occupation. These countervailing facts to the already refenced facts in the “nature of trade” analysis above lead to similar conclusions. 76 th Ave. was purchased, developed and sold in a venture of trade for profit without having been occupied by [NAME]. [APPELLANT] or any related individual as a primary residence. Even a deemed “[NAME]” must have an intention to occupy as a primary residence: Lacina v. [NAME] [1997] FCJ no. 998 (FCA) at paragraphs 17 and 18. As such, when sold, 76 th Ave. was not an occupied used residential property. [ 30 ] For these reasons, the appeals are dismissed. There shall be no costs. Signed at Edmonton, Alberta, this 25 th day of June, 2026. “[NAME].[NAME]. [NAME]” [NAME] J. CITATION: 2026 TCC 117 COURT FILE NOs.: 2025-2985(IT)I 2025-2986(IT)I STYLE OF CAUSE: [APPELLANT], [APPELLANT] AND HIS MAJESTY THE KING PLACE OF HEARING: Vancouver, British Colombia DATE OF HEARING: May 11 th , 2026

REASONS FOR

ORDER BY: The Honourable Justice Randall Bocock DATE OF

ORDER: June 25, 2026 APPEARANCES: [NAME]: [NAME] Counsel for the Respondent: [redacted] COUNSEL OF RECORD: [NAME]: Name: [NAME]: N/A For the Respondent: [redacted] Ottawa, Canada