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Docket: 2003-3267(GST)I |
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BETWEEN: |
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BLANCHE'S HOME CARE INC., |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
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Appeal heard on February 26, 2004 at Saskatoon, Saskatchewan.
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Before: The Honourable Justice David W. Beaubier |
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Appearances: |
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Agent for the Appellant: |
Dan McDonald |
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Counsel for the Respondent: |
Michael Ezri and Anne Jinnouchi |
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JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated November 4, 2002, is dismissed in accordance with the attached reasons for judgment.
Signed at Regina, Canada, on this 9th day of March, 2004.
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"D.W. Beaubier" |
Beaubier, J.
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Citation: 2004TCC192 |
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Date: 20040309 |
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Docket: 2003-3267(GST)I |
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BETWEEN: |
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BLANCHE'S HOME CARE INC., |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the Informal Procedure was heard at Saskatoon, Saskatchewan on February 26, 2004. Dan McDonald, a representative of the Appellant, was the only witness.
[2] Paragraphs 3 to 19 of the Reply to the Notice of Appeal set out the matters in dispute. They read:
3. With respect to Part "F" of the Notice of Appeal, he states that paragraph 2 is in the nature of argument. To the extent that it does contain any relevant allegations of fact to admit or deny, he denies them. For greater certainty, he states that a GST application Ruling dated May 2, 2003 stated that the Appellant's supply under its Admission Agreement was an exempt supply of service under both Schedule V, Part II, section 2 and Schedule V, Part IV, section 2 of the Excise Tax Act.
4. With respect to Part "F" of the Notice of Appeal, he states that paragraphs 1, 3, 4 and 5 are in the nature of argument and contain no relevant allegations of fact to admit or deny.
5. On August 30, 2002, the Minister of National Revenue (the "Minister") received from the Appellant a GST New Residential Rental Property Rebate Application (the "Application") in which the Appellant claimed a rebate for $6,680.70 (the "Rebate") in respect of GST paid on the purchase of the Home.
6. The Minister assessed the Appellant by Notice of Assessment dated November 4, 2002, denying the Appellant the Rebate.
7. The Appellant objected to the Notice of Assessment by Notice of Objection dated November 13, 2002.
8. By Notice of Decision dated June 20, 2003, the Minister confirmed the assessment.
9. The Appellant's Notice of Appeal was filed in this Court on September 16, 2003.
10. In assessing the Appellant and in confirming that assessment, the Minister assumed the same facts, which are as follows:
a) the Appellant is a corporation;
b) the Appellant entered into a Purchase and Sale Agreement with North Ridge Development Corporation on December 4, 2001;
c) in the Purchase and Sale Agreement, the North Ridge Development Corporation agreed to construct a building and to sell it and the land that the building was to be situated on to the Appellant;
d) the building and the land were located at civic address 1322 Konihowski Road in Saskatoon, Saskatchewan;
e) the Appellant is not a GST registrant;
f) the Appellant did not claim input tax credits in respect of the GST paid;
g) the Appellant filed an Application claiming the Rebate in respect of GST paid on the purchase of the land and the building;
h) the Appellant obtained a licence to operate the building as a "personal care home" (the "Home") under the Province of Saskatchewan's Personal Care Homes Act and Personal Care Homes Regulations, 1996;
i) the Appellant and each resident entered into a written Admission Agreement (the "Admission Agreement") respecting the terms and conditions of residence in the Home;
j) the Appellant provides residents with accommodation, meals and supervision or assistance with personal care;
k) the maximum number of residents the Home accommodates is ten;
l) the Home has specialized equipment including a ramp, easy access bathtub, safety bathtub, raised toilets with bars and level door handles;
m) the Appellant provides direct assistance to, or supervision of, the residents in performing their activities of daily living, which include but are not limited to eating, bathing, dressing, grooming, participating in social and recreational activities and in taking medication;
n) the Appellant provides residents with 3 nutritionally balanced meals each day; nutritious snacks between meals and at bedtime; on-site supervision on a 24-hour basis; laundry, supervision of grooming, bathing, dressing and nail care, arranging for transportation; a safe place to store medications; home based social and recreational activities; pick-up of prescriptions and arranging for refills; and recognition of special occasions;
o) the Appellant requests written assessments of a resident's care needs by an assessment agency within seven days after the resident is admitted to the Home;
p) the Appellant provides residents with additional care and assistance that is required as a result of an assessment of a resident's care needs, including mobility assistance, specialized care and cognitive care;
q) the Appellant develops care plans for each resident within seven days after the resident is admitted to the Home;
r) the Appellant identifies in the care plan the types of assistance or supervision that residents need in their activities of daily living and addresses their physical, cognitive, emotional, social and spiritual needs; and
s) residents pay a fixed monthly fee for the accommodations, meals, supervision, care, and services outlined in the above subparagraphs (m) through (r).
B. ISSUES TO BE DECIDED
11. The issues to be decided are as follows:
a) Is the Appellant eligible for a GST New Residential Rental Property Rebate in respect of GST paid on the purchase of the land and the building?
b) Were any of the rights of the Appellant guaranteed by subsection 15(1) of the Canadian Charter of Rights and Freedoms (the "Charter") denied or infringed?
c) If any of the rights of the Appellant have been denied or infringed, is the infringement reasonable within the meaning of section 1 of the Charter?
C. STATUTORY PROVISIONS
11. He relies on section 123(1), subsection 256.2, and Schedule V, Part I, sections 5.1, 6, 6.1 and 7 of the Excise Tax Act, R.S.C. 1985, c. E-15, as amended; and sections 1 and subsection 15(1) of the Canadian Charter of Rights and Freedoms.
D. GROUNDS RELIED ON AND RELIEF SOUGHT
12. He submits that a "supply" as defined in subsection 123(1) of the Excise Tax Act "means, subject to sections 133 and 134, the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition."
13. He submits that a "service" as defined in subsection 123(1) of the Excise Tax Act "means anything other than property...".
14. He submits that the Appellant is making a single supply of a "service" as defined in subsection 123(1) of the Excise Tax Act and therefore the Appellant cannot be making a supply of "property".
15. He submits that the supply made by the Appellant to the residents under the Admission Agreement is not a supply of a "qualifying residential unit" as defined in subsection 256.2(1) of the Excise Tax Act.
16. He submits that the Appellant is not holding a "qualifying residential unit" as defined in subsection 256.2(1) of the Excise Tax Act.
17. He submits that the Appellant is not holding a "qualifying residential unit" for the purpose of making exempt supplies that are included in Schedule V, Part I, section 6 of the Excise Tax Act.
18. He submits that the Appellant did not supply a residential unit in a residential complex by way of lease, licence or similar arrangement for the purpose of its occupancy as a place of residence or lodging by an individual and, accordingly, the subject supply is not an exempt supply as contemplated in Schedule V, Part I, section 6 of the Excise Tax Act.
19. He submits that subsection 15(1) of the Charter does not apply to the Appellant since the Appellant is a corporation and not an individual.
[3] The Appellant is a corporation, not an individual. Therefore the Charter has no application to this appeal.
[4] None of the assumptions except 10(p) were refuted. Respecting assumption 10(p), Mr. McDonald's testimony is accepted: the Appellant's care is primarily of a supervisory nature. It reminds residents to take their drugs or to eat their meals and provides assistance in a supervisory manner. It does not provide medical or any form of intense care. If restraint or something similar becomes necessary, it is only done on an interim basis by the Appellant while a proper nursing home is found. The residents usually come to the Appellant on reference from a hospital or similar source because they are living alone and have come to need forms of reminder or supervision which does not amount to a form of physical or nursing care.
[5] The Appellant operates 1322 Konihowski Road as a licenced personal care home under The Personal Care Homes Act, R.S.S., P-6.01, which defines a personal care home in section 2 as "... a facility that provides: (i) accommodation and meals; and (ii) supervision or assistance with personal care; to an adult...". While this Act does not appear to require care receivers to reside in the home, the definition of "care" in section 2 of its Regulations is "the provision of care... to a resident." A "resident" is defined in the Regulations as "an adult... who resides in the home for the purpose of receiving personal care."
[6] The definition of "resident" quoted from the Regulations is in accord with Mr. McDonald's testimony. Most of the Appellant's residents previously lived alone in their own homes - whether they were apartments or houses. They moved into 1322 Konihowski Road "for the purpose of receiving personal care". In other words, it was not to have a roof over their heads. It was because they needed the personal care services that the Appellant provides. (And although this opinion plays no part in the Court's decision, it is clear that both the quality of the premises and the quality of the services provided by Blanche's are exemplary and appear to set the standard for personal care in homes in Saskatoon.)
[7] Mr. McDonald testified that the Appellant's current fee is $1,750 per month. By comparison, an average one bedroom apartment in Saskatoon rents for $500 per month. (That is average, not exemplary.) Mr. McDonald also testified in cross-examination, that about $1,000 of the monthly fee is likely consideration for services. Thus, more than 50% of the monthly fee is for personal care services and not for simple residential accommodation. The average age of a resident is between 85 and 90. Most have a medical problem such as Alzheimer's disease.
[8] Although The Personal Care Homes Act doesn't say so, its Regulations make a residential unit necessary to such a home. That is the first ingredient for the concept of "resident" to occur. But the services provided cannot be omitted because they constitute the "care" provided by the licensee which are detailed by the Regulations right down to a plan of care and a five week planned menu of meals and snacks. Thus the two are interconnected and intertwining. Each is an integral part of the composite whole. The compound supply cannot be split up for tax purposes. They are rendered under a single contract for a single consideration. (See Rip, J., O.A. Brown Ltd. v. Canada, [1995] G.S.T.C. 40 (T.C.C.), esp. paras. 27 and 29.)
[9] Mr. McDonald argued quite sensibly, that what the Appellant provides is a "primary place of residence" and that the rest is subsidiary to that. But even forgetting about the relative costs or considerations in the $1,750 monthly fee, it is not possible for the Court to separate the components based upon the evidence before the Court.
[10] For this reason, the appeal is dismissed.
Signed at Regina, Canada, on this 9th day of March, 2004.
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"D.W. Beaubier" |
Beaubier, J.
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CITATION: |
2004TCC192 |
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COURT FILE NO.: |
2003-3267(GST)I |
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STYLE OF CAUSE: |
Blanche's Home Care Inc. v. Her Majesty the Queen |
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PLACE OF HEARING: |
Saskatoon, Saskatchewan |
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DATE OF HEARING: |
February 26, 2004 |
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REASONS FOR JUDGMENT BY: |
Justice David Beaubier |
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DATE OF JUDGMENT: |
March 9, 2004 |
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APPEARANCES: |
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Agent for the Appellant: |
Dan McDonald |
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Counsel for the Respondent: |
Michael Ezri and Anne Jinnouchi |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |