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Hst Rebate for New-Build Property Denied

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We’ve explained the HST rebate for new houses and condos in our blog post here. There have been recent decisions from the Federal Court of Appeal that have denied the purchaser’s claim for the HST rebate. To keep you informed and alert, we’ve shared these cases below.


HST rebate denied in Canada v. Cheema, 2018 FCA 45.

In 2012, Cheema wanted to purchase a new-build property in Vaughan. In order to qualify for financing, he needed his friend Akbari to co-sign the Agreement of Purchase and Sale. Cheema and his spouse acquired an undivided 99% interest in the property and Akbari acquired 1% interest. To get the HST rebate, all purchasers had to purchase the property with the intention of using it as their primary residence. The CRA denied the full HST rebate because only Cheema and his spouse intended to use the property as their primary residence and Akbari did not.


HST rebate denied in Canada v. Ngai, 2019 FCA 181.

In December 2012, Ngai, a real estate agent, wanted to help her client by preserving her client’s rights to a new-build condo in Markham. Ngai decided to co-sign the Agreement of Purchase and Sale for the condo with her client. Her client chose not to proceed with the transaction but instead Ngai’s nephew decided to buy the property to live in it. To help the nephew’s purchase financing, Ngai and her husband decided to proceed with the purchase, but Ngai and her husband did not intend to live in the property. Ngai held 49%, her husband held 1% and her nephew held 50% interest in the property. Due to circumstances related to the nephew’s job, the nephew eventually decided to sell the property in February 2013. The CRA refused Ngai’s HST rebate application on the basis that Ngai did not intend to live in the property.

Ngai’s appeal to the Tax Court of Canada was allowed based on the fact that Ngai and her husband had signed a trust declaration and were solely acting as agents and bare trustees for the nephew who satisfied the HST requirement through his intention to occupy the property as his primary residence.

This case was again heard in appeal at the Federal Court of Appeal. The Federal Court of Appeal reversed the Tax Court’s finding that the rebate could be claimed by Ngai. The rebate was refused because 1) Ngai did not live in the property as her primary residence and never intended to, and 2) her nephew who did live in the property is not a relation of Ngai as per the Income Tax Act definition.

For more information on whether you qualify for the HST rebate for new houses and condos, please contact a lawyer to discuss your specific circumstances.



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Rae Ravani is an Associate with Kormans LLP. Her practice areas include Real Estate & Corporate Law. You can reach Rae at

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