ETA s. 191.1(2) effectively deems the HST to be payable on the greater of most costs and the fair market value where the builder received government funding "for the purpose of making residential units in the complex available to [seniors]."
Owen J found (at paras. 93 - 95) that although the form of government assistance from the Nova Scotia Department of Health for an addition to a nursing home was its agreement to subsidize operating costs relating to the care of additional residents (the "Services") and not the construction costs:
[T]his does not alter the fact that the dominant purpose of the Department in…agreeing to make these payments was to secure additional long‑term care beds for seniors in Nova Scotia. The immediate result of the payments may have been the provision of the Services but that was not the purpose behind the payments.
To summarize, the purpose of the arrangements mandated by the Department is clear. The government of Nova Scotia as represented by the Department needed new long‑term care facilities and chose to partner with the private sector to bring that objective to fruition. The means of achieving the desired objective was to provide for successful bidders a guaranteed level of funding, which is payable under the terms of a service contract. This means does not alter the objective that was sought to be achieved by the government in unilaterally establishing the arrangements with successful bidders.
The fact that High-Crest was subject to an annual licensing requirement does not alter the purpose of the funding provided by the Department to High-Crest.
He previously noted (at para. 80):
In light of the focus on the purpose of a third party - the grantor or organization - the use of the definite article "the" before the word "purpose" suggests that the definition requires a determination of the main or dominant purpose of the grantor or organization. Otherwise the builder would be faced with the near impossible task of ruling out all other possible purposes.
See summary under ETA, s. 191.1(1) - Government Funding.