taxpayer agreed in March 2019 to acquire a new single unit residential complex located in Caledonia (the “Rebate Property”) in order that her family could move there from the Windsor area to afford her husband better work opportunities.
However, due to delays resulting from the onset of the COVID pandemic, the Rebate Property did not become available for occupancy until October 2020. At that time, the taxpayer’s children were in the middle of the school year, and she rented the Rebate Property to a third-party residential tenant. The lease was terminated around April 2021, and her family moved into the property on August 31, 2021. However, it proved to be too small, so they closed on the purchase of a new home in May 2022 and started renting the Rebate Property to third-party tenants.
On these facts, the taxpayer did not satisfy the requirement in s. 254(2)(g) that the first individual to occupy the complex as a place of residence after substantial completion was her or a relation. However, she argued that she was frustrated in meeting that requirement. Crown counsel agreed that the occurrence of a frustrating event may, in proper circumstances, relieve a taxpayer from satisfying the residency requirement of s. 254(2), but indicated that to be a frustrating event, the following three requirements must be met (at para. 49):
- the event must be unforeseeable;
- the event must be beyond the control of the taxpayer; and.
- such event results in the absence of real choice, thereby making living primarily and habitually in the property impossible.
Crown counsel conceded that the first two requirements were met but disputed the satisfaction of the third requirement.
In finding that the taxpayer had been frustrated in meeting the s. 254(2)(g) requirement, Bodie J. noted that the failure of her and her husband to achieve their intention of moving into the Rebate Property was attributable to: the builder delaying delivery of possession until her children had started their school year; her family facing a health crisis due to sickness from exposure to the COVID virus, which raised concerns about the safety of a move; and the extended isolation periods they faced because of their sickness meant that they had less income and therefore less ability to carry two mortgages.
Thus, “the family had no real choice but to stay in Windsor until the conditions caused by the pandemic stabilized and to earn rental income from their unoccupied property in the interim” (para. 57). Thus, her ability to satisfy the requirements of s. 254(2)(g) was frustrated, and she was entitled to the rebate.