ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-415666
DATE: 20120809
BETWEEN:
CSH AURORA RESTHAVEN INC. Appellant – and – HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF FINANCE Respondent
John A. Macdonald , for the Appellant
Ryan Mak and Jessica Fiore , for the Respondent
HEARD: May 15, 2012
b. p. o’marra j
reasons for decision
[ 1 ] The purchase price for a nursing home facility included an amount attributed to licences.
issue
[ 2 ] The parties have stated a question of law in the form of a Special Case pursuant to Rule 22.01. There are four companion cases with the same issue.
[ 3 ] Is land transfer tax payable on the amount attributed to licences?
the facts
[ 4 ] In January of 2007 the Appellant agreed to purchase a licensed nursing home.
[ 5 ] The Agreement of Purchase and Sale allocated the purchase price as follows:
Land
$2,772,000
Building
14,112,176
Licences
9,970,000
Total:
$26,845,176
[ 6 ] In March of 2007 the Minister of Revenue was notified of the transfer by letter. The value of consideration was declared to be $18,441,462. That sum did not include the cost of the licences. Land Transfer tax for that sum totalled $262,109.57.
[ 7 ] In July of 2007 the Ministry issued a Notice of Assessment to the Appellant for additional taxes plus penalty and interest of $149,550. The additional tax was based on the Ministry’s determination that the value of consideration included the cost of the licences.
[ 8 ] In December of 2007 the Appellant filed a Notice of Objection.
[ 9 ] In August 23, 2010 the Ministry confirmed the Assessment.
position of the Appellant
[ 10 ] The Appellant submits the following:
- Licences are personal property and not land.
- Assignment of a licence is not a “conveyance” as defined in the Act .
the law
[ 11 ] The Act provides that tax is payable where there is a conveyance of land. The amount of tax is computed based on the “value of consideration”.
Land Transfer Tax Act , s. 2(1)(a) and (b).
[ 12 ] “Value of consideration” is broadly defined to include the following:
“… the value expressed in money of any benefit of whatsoever kind conferred directly or indirectly by the transferee on any person as part of the arrangement relating to the conveyance …”
Land Transfer Tax Act , s. 1.
[ 13 ] This part of the definition of “value of consideration” clearly includes consideration for benefits that are not land so long as they are related to the conveyance.
[ 14 ] In Re 472601 Ontario Ltd. and Minister of Revenue a purchaser signed an agreement of purchase and sale of townhouses with a vendor and a third party. The latter was to provide management and leasing services to the purchaser for a fee. The court found that those services were “part of the arrangement relating to the conveyance” and were subject to land transfer tax.
(1988) 1987 4185 (ON SC) , 59 O.R. (2d) 24 (H.C.J.) per Griffiths J.
analysis
[ 15 ] There is a significant connection between the licences and the conveyance of the land in this Agreement of Purchase and Sale:
- The licences are included as part of the assets being obtained.
- The Agreement is conditional on obtaining all appropriate consents from the provincial government. This would include the consent of the Ministry of Health to issue nursing home licences to the purchaser.
- The property was purchased for the specific purpose of operating a nursing home. The licences were necessary for that purpose.
[ 16 ] In light of the strong connection between the licences and the conveyance of land the licences were benefits expressed in money conferred on the purchaser as part of the arrangement relating to the conveyance. Thus they were part of the “value of consideration” for the conveyance and subject to land transfer tax.
result
[ 17 ] Appeal dismissed. If the parties cannot resolve the issue of costs I will consider brief written submissions (no more than 3 pages) to be sent to Judicial Administration by August 20, 2012.
B. P. O’Marra J.
Released: August 9, 2012
COURT FILE NO.: CV-10-415666
DATE: 20120809
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
CSH AURORA RESTHAVEN INC. Appellant – and – HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF FINANCE Respondent
REASONS FOR DECISION
B. P. O’Marra J.
Released: August 9, 2012