Many taxpayers expect that once the Canada Revenue Agency (“CRA”) determines that they are entitled to a GST/HST or income tax refund, that the refund will simply be paid. Unfortunately, that is often not the case (!) with the CRA explaining its “set-off” rights in a recent industry roundtable, confirming that where refunds are due, those amounts can often be automatically transferred to satisfy outstanding balances in other CRA tax accounts.
Many taxpayers assume that once a CRA auditor starts an Audit, the Audit needs to be completed, with no opportunity to reach an early settlement on contentious issues. To the contrary, CRA has recently confirmed that many Audits can, in fact, be settled – albeit only after being subject to additional internal review before becoming final.
The Canada Revenue Agency (“CRA”) has recently announced an important administrative change affecting many large business audits (“Audits”). More specifically, CRA has advised at a major industry roundtable that rather than examining one taxation year at a time, Auditors may now adopt a two-year Audit workplan and request records from multiple years at the outset of an Audit.
TCC DECISIONS SEEM TO BE RECOGNIZING MODERN HOUSING REALITIES
Homeowners who claim New Housing Rebate often face Canada Revenue Agency (“CRA”) review. The central issues in these cases are often whether the homeowners intended to use the subject home as a primary place of residence (or for some other purposes) and whether the home was in fact occupied as a place of residence following construction or renovation.
While the Tax Court of Canada (“TCC”) has traditionally adopted a fairly rigorous approach when interpreting and applying these two requirements, two recent TCC decisions seem to reflect a more flexible approach, perhaps aligning with modern housing realities.
Federal tax legislation in Canada encourages the construction and renovation of residential homes through a range of tax rebates. However, eligibility for these rebates is not always clear-cut.
In the recent case at the Tax Court of Canada (“TCC”) – Osagie v. The King, 2025 TCC 114 – the Court concluded that a homeowner was eligible to claim a GST/HST “new housing rebate” without satisfying all legislated conditions. This decision suggests that eligibility for GST/HST housing rebates may be broader than previously thought.
As we have written here and here, CRA is ALL over the Canadian real estate industry, assessing homebuyers, condo renters and everyone in between for GST/HST and income taxes related to use or sale of houses or condos on the suspicion of business or trading activities.
When using one’s home or other real estate holdings for business or trading purpose (CRA calls this an “adventure or concern in the nature of trade”), significant tax consequences can arise, as highlighted in CRA ruling from back in 2020, reviewed below.
