Purchasers Get Burned, by Cyndee Todgham Cherniak


Counsel and advisors to clients engaged in real

estate transactions should be cautious when

providing advice on the GST status of uninhabitable

real property. The decision in Yakabuski v. The

Queen,1 which was decided under the Tax Court of

Canada's informal procedure, requires that the

parties characterize a supply of residential property

according to the immediate state of the property,

without reference to how the property was

characterized in the past. In the Tax Court's view,

residential real property can change in character:

what was previously exempt can revert back to a

taxable status without a corresponding change in

use or recovery of embedded GST.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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