Tax Court of Canada


Goods and Services Tax

Administration and enforcement

Fair market value based on comparison method was justified

Appellant purchaser purchased property from son-in-law (tax debtor) for $220,000. Tax debtor owed Minister of National Revenue $163,806.23 at time of purchase. Minister assessed purchaser under s. 325 of Excise Tax Act on basis that purchaser had non arm’s length relationship with tax debtor and that property was transferred for inadequate consideration as fair market value was $312,000. Purchaser appealed on ground that property’s fair market value was $207,000. Appeal allowed, and matter referred back to Minister for reconsideration and reassessment on basis that fair market value was $271,000. Purchaser did not question presence of transfer, consideration, non-arm’s length relationship, or underlying tax liability. Evidence of Minister’s expert was preferred over that of purchaser’s expert. Minister’s expert was justified in establishing fair market value at $312,000 based on comparison method, and given construction defects, contributory value of work to be done and administrative expenses, expert was justified in finding that fair market value was $271,000.

Harvey c. La Reine (2018), 2018 CarswellNat 2129, 2018 CarswellNat 2130, 2018 TCC 67, 2018 CCI 67, Guy R. Smith J. (T.C.C. [Informal Procedure]).

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