Docket: 2022-2529(GST)G

BETWEEN:

SHADI ASADI,

Appellant,

and

HIS MAJESTY THE KING,

Respondent.

Appeal heard on April 20 and 21, 2026, at Toronto, Ontario, and written submissions filed by the Appellant on May 6 and June 8, 2026, and by the Respondent on May 22 and July 9, 2026.

Before: The Honourable Justice Lara G. Friedlander

Appearances:

Counsel for the Appellant:

Monica Carinci

Rebecca Skinner

Counsel for the Respondent:

Grigor Grigorian

JUDGMENT

In accordance with the attached Reasons for Judgment, the appeal of the reassessments dated July 13, 2022, made under Part IX of the Excise Tax Act for the Appellant’s reporting period from October 1, 2015 to October 31, 2015, are dismissed.

Costs are awarded to the Respondent.

The parties shall have until September 8, 2026, to reach an agreement on costs, failing which any submissions by the Respondent with regard to costs shall be served and filed on or before September 18, 2026, and shall not exceed five pages. Any submissions of the Appellant replying to submissions of the Respondent shall be served and filed on or before September 28, 2026, and shall not exceed five pages.

If, by September 18, 2026, the parties do not advise the Court that they have reached an agreement and no submissions by the Respondent are received by the Court, the Respondent shall be entitled to costs in accordance with the Tariff.

Signed this 10th day of August, 2026.

“Lara Friedlander”

Friedlander J.

Citation: 2026 TCC 147

Date: 20260810

Docket: 2022-2529(GST)G

BETWEEN:

SHADI ASADI,

Appellant,

and

HIS MAJESTY THE KING,

Respondent.

REASONS FOR JUDGMENT

Friedlander J.

[1] There are two issues in this Appeal. The first is whether the Appellant was obligated to collect and remit harmonized sales tax (“HST”) on the sale of a property (the “Property”) in mid-town Toronto in October of 2015. If the Appellant was so required, the second issue is whether the Appellant was entitled to an input tax credit (“ITC”) for HST on the sales commission (the “Commission”) paid to a real estate broker in connection with the sale of the Property. Failure to file penalties were also assessed.

I. Factual Background

[2] The Appellant grew up in Toronto. She is a member of a tight-knit family of Iranian origin, which in turn has close ties to other members of the Iranian community in and around Toronto. Her father is a computer engineer by trade who practiced as a real estate agent for a period of time. The Appellant graduated from York University in 2008 with a Bachelor’s degree in Linguistics, and went on to receive a Master’s degree in speech and language pathology from the University of British Columbia in 2011.

[3] After writing her licensing exam and travelling abroad, she moved back into the family home in January, 2012 and began searching for work in Toronto, hoping to work with young children on the autism spectrum. She regularly checked job postings on a national website and on an Ontario website run respectively by the federal and Ontario governing bodies for her profession, and checked other resources and used personal contacts to search for employment. She limited her search to Toronto, but applied for any available opportunities. However opportunities were scarce, and she had difficulty even obtaining job interviews.

[4] At some point between January and March, 2012, the Appellant, perhaps inadvertently, enlarged her job search on the federal website referenced earlier, and discovered a temporary position covering a maternity leave. The position was located in Penticton, British Columbia. She said she knew so little about Penticton that she had to consult a map to locate it. She expected the job to last 10-12 months. She moved to Penticton at the end of March, 2012, in time to start her new job on April 2, 2012.

[5] She stated that she expected to return to Toronto at the end of her temporary placement, and kept an eye on the Toronto job market during her time in Penticton, applying for positions in Toronto from time to time. When she moved to British Columbia she brought only two suitcases, and slept in the den of a friend’s apartment.

[6] In March of 2013 she was told that there was a possibility that her job in Penticton would be extended past April of 2013, when the maternity leave had been anticipated to end. Her posting was indeed extended, and she was still working there in November of 2013 when she began a serious romantic relationship with an Australian working in Canada. As the relationship deepened, she became less enthusiastic about moving back to Toronto, and indeed moved to Australia with her partner in December of 2014.

[7] After approximately two years in Australia, the Appellant’s relationship ended, and she moved back to British Columbia to work for her former employer. She later found a job in Vancouver, where she has lived ever since. She currently works as a speech language pathologist at a public clinic and at a private clinic, and rents a one bedroom apartment in Vancouver. When asked why she did not choose to purchase a property in Vancouver, she stated that she understood that her parents were willing to buy a residence for her only if she were living and working in the Toronto area.

II. The Property

[8] When the Appellant returned to the Toronto area in January of 2012, she began looking for a property to purchase. She testified that her parents strongly suggested that she buy rather than rent and had indicated that they would fund the purchase and any necessary repairs or renovation. Various friends, including Asana Shakibaeian, referred her to an area near Yonge and St. Clair in mid-town Toronto, and to the Property in particular. She liked the area because it was close to the subway and potential jobs. She looked at the Property two to three times between late January, 2012 and early February, 2012. She stated that she thought it didn’t need much work; perhaps just a paint job and a few other minor adjustments – a “face lift”, as she described it. The Appellant stated that she did not purchase the home on the direction of her parents and did not speak to her father to obtain permission to purchase the Property, but did acknowledge that she would have spoken to her parents about the compatibility of the decision with her life goals and that her father would have offered her information that she could use in her decision-making process. She testified that during her visits she could see that significant construction activities were taking place on the two neighbouring lots.

[9] The agreement of purchase and sale for the Property was signed on March 6, 2012, with a closing of May 30, 2012. The agreement was signed by Asana Shakibaeian as trustee for the Appellant as the Appellant was out of town during the closing. The Property was purchased for $1,350,000 with a combination of cash on hand and the proceeds of a mortgage. The cash on hand was provided by the Appellant’s parents, who also made the periodic payments on the mortgage. The Appellant did not do an inspection before purchasing the Property, and an inspection was not a closing condition. She stated that no one had done any inspection of the Property (including, I infer, any of the family friends who worked for Enirox (defined below), who had experience with residential real estate or who otherwise recommended the Property to her) with her or on her behalf prior to her purchase of the Property, other than the Appellant walking through the Property herself. The Appellant could not recall why she did not do an inspection, and admits that she had no knowledge regarding the cost of home renovations. She did not provide any evidence as to whether her father, who had had experience as a real estate agent and who gave her advice regarding many aspects of her life including the purchase of the Property, suggested that she get an inspection of the Property.

[10] In her testimony, the Appellant indicated that Asana Shakibaeian knew about the Property because her brother lived close by, and that she knew of another close family friend who lived close to the Property. Indeed, the Appellant’s purchase occurred close in time to the purchase of a property two doors down by Ario Shakibaeian, the brother of Asana Shakibaeian.

[11] The Appellant testified that after purchasing the Property, she noticed dampness in the basement and accumulating water in some places, and saw that the roof was leaking. She contacted a close friend who worked for Enirox Group Inc. (“Enirox”), a company that conducted a home construction business, and asked for advice as to how to proceed. That friend recommended demolishing the house and building a new one. (I note that the Appellant testified that she discovered only later on that Enirox was constructing new houses on the two neighbouring lots referenced above.) No written report from Enirox was obtained. There was no evidence that the Appellant sought advice from a building inspector or from a professional who was not in the business of constructing houses. The Appellant testified that she made the decision to demolish and rebuild in the course of several visits to Toronto, on the basis that the house was not in a condition that would meet her long-term needs. The Appellant’s parents agreed to finance the costs of demolition and construction, although the Appellant indicated that she did use some of her (relatively) modest personal savings to help furnish the home when it was still in its original state. A construction management agreement was entered into between the Appellant and Enirox dated June 25, 2012.

[12] I note that this testimony is not consistent with the Notice of Appeal, which states at paragraph 4 that the “Appellant purchased the Property for her personal use, with the intention to construct a new home at the Property for use as her primary residence”.

[13] The Appellant engaged an interior designer (Carey Mudford Design) on the recommendation of her real estate agent; that designer had also designed the interiors of some neighbouring houses. She testified that she was asked by Enirox to put together a wish list or describe her “dream home”, and appeared to be making choices to guide the design based on what she “ideally” wanted. She testified that she hoped that she might use part of the building for a private clinic. She stated that the reason for the large number of bedrooms – five – was to enable her to use one or several of the bedrooms as rooms from which to see patients. She also installed an elevator, which she stated would be of assistance of patients with mobility issues. I note that counsel for the Respondent commented that the potential usage of the Property to see private patients was never mentioned during discoveries or at any point prior to trial; the Appellant’s testimony on this point was the first time this information was made known to counsel for the Respondent. There was also no testimony as to whether any elements of the house were designed in a fashion that would suggest that the bedrooms would be used as rooms to see patients rather than as bedrooms, such as closets, the presence or absence of ensuite bathrooms or the location of bedrooms within the house.

[14] An application for a demolition permit was made in February of 2013, and was issued in June of 2013.

[15] The Property was listed for sale on April 8, 2013. The Appellant testified that she decided to sell the Property as it was not yet ready for occupation, her parents’ financial support was increasing and the Appellant’s position in British Columbia had been extended. She stated that she wanted to “see this role through”, noting that by this point she had been guaranteed a job at the Penticton clinic. The Property was delisted on May 26, 2013. The reasons for the initial delisting were not entirely clear from the Appellant’s testimony; the Appellant appeared to suggest that she was convinced, in discussions with her family, that perhaps there was a chance that she might return to Toronto and begin seeing private clients. The Property was listed again on December 4, 2014 because, as the Appellant explained, she had by this time decided to live in Australia. The Property was then delisted on February 10, 2015, and then listed and delisted on February 24, 2015 and May 15, 2015 respectively. It was listed yet again on May 21, 2015 and was ultimately sold by way of a purchase and sale agreement dated June 15, 2015 with a closing no later than October 20, 2015 for a price of $3.845 million. (The parties agree that the closing did in fact take place on October 20, 2015.) The purchase and sale agreement was signed by a friend who “was involved with” Enirox on behalf of the Appellant. The Appellant explained that the multiple listings and delistings were a reaction to a lack of success with the selling process, and a resulting change or two of real estate agents.

[16] Construction costs were $1,356,397.56 plus $168,340.63 in HST. On the sale of the Property, a commission of $153,800.00 (the aforementioned “Commission”) plus $19,994.00 in HST was paid.

[17] The house ultimately sold had, according to the listing, five bedrooms, five bathrooms including a seven piece ensuite bathroom, a wet bar in the basement, a butler’s pantry, a wine cellar and 3,385 square feet above ground plus 1165 square feet in the basement. The Appellant herself wondered if counsel for the Respondent had asked whether the house was “extravagant” for a person of her age and stage, but stated that the design of the house reflected her desires for her future. She also commented that the size and design of the home were consistent with the cultural norms and traditions of the Iranian community.

III. Other Real Estate Experience

[18] The Appellant has had some involvement in other residential real estate transactions. In November of 2007, the Appellant purchased a property (the “Berkindale Property”) in the Bayview/York Mills area of Toronto for $1,209,000. The Appellant testified that, at the time of the purchase, she was in her last year at York University. Her mother was very ill at the time, and her father wished the entire family, including the Appellant’s brother and potentially other family members, to live in a property where the family could care for the Appellant’s mother. However, ultimately her mother did not wish to be uprooted and move to the Berkindale Property. A decision was made to sell the Berkindale Property because, as the Appellant explained, it was too much of a burden and her brother wished to live on his own. By this point her mother had recovered.

[19] The listings for the sale of the Berkindale Property were put into evidence. The photos and descriptions indicate that either the original house underwent an extensive renovation, or that it was demolished and a new residence was built. The 2007 listing described the property as being an “incredible Opportunity to Build Your Dream Home” [sic], with the property being sold in “As Is Condition” without any showings. The property being sold had five bedrooms, ten bathrooms (including five ensuite bathrooms), a home theatre and 6000 square feet of living space, according to the listing. (The Appellant testified that the “grand” aesthetic of the Berkindale Property and the Property was an aesthetic with which she was familiar, as it is common in the Iranian community.) In any case the residence ultimately sold for $3,680,000. The Appellant’s father acted as the real estate agent for both the purchase and the sale of the Berkindale Property.

[20] There was some confusion as to the identity of the beneficial owner of the Berkindale Property. The listing indicates that the Appellant was the seller of the home in 2011. However, paragraph 51 of the Notice of Objection states that “[t]he Property was the first property Shadi ever purchased.” Then in a letter to the CRA dated November 30, 2021, the Appellant’s counsel wrote the following:

We confirm that Shadi has purchased three properties in her lifetime: (1) the Property; (2) 22 Berkindale Drive, Toronto, Ontario (“22 Berkindale”); and (3) 23 Irvington Crescent, Toronto, Ontario (“23 Irvington”). Shadi purchased 22 Berkindale in 2007. Shadi became overburdened with ownership costs and financing, and made the decision to sell 22 Berkindale…”

[21] Then on discoveries in June of 2024, the Appellant stated at Question 9 that she did not hold any property in Toronto prior to April 2012.

[22] During the hearing the Appellant testified that in the course of discussions with her parents in preparation for trial, she discovered that she had in fact been acting merely as agent, holding legal title to the Berkindale Property for her parents. Accordingly, on April 14, 2026, less than a week before trial, counsel for the Appellant notified the Court (the “April 14, 2026 Letter”) that the Appellant was not the beneficial owner of the Berkindale Property, but rather that she was the legal owner holding the property in trust for her father (and not her parents, in contrast to the Appellant’s testimony). That letter also indicated that the Appellant was on title for estate planning purposes only. The Appellant stated during testimony that it was her parents who were overburdened by the property (and not her). No documents regarding the trust relationship relating to the Berkindale Property were produced at any point. The Appellant testified that she did not report the gain on the Berkindale Property on her income tax return; no evidence was adduced as to whether either or both of her parents reported the gain on the Berkindale Property for income tax purposes.

[23] The Appellant bought another property (the “Irvington Property”) in the Willowdale area of Toronto on April 3, 2017. She testified that she was encouraged by her father to buy a property in Toronto when she returned from Australia. Her brother was the owner of the property next door. After the Appellant moved to Vancouver for her new job, the decision was made to sell the Irvington Property. The Irvington Property was listed in the spring of 2019, and then again in the fall of 2019, when it was ultimately sold. No renovations to that house were done. Her brother also sold his property. Both listings suggests that the two properties could be purchased together, although there was no binding agreement between the Appellant and her brother on that point.

[24] The Appellant stated that all the financing for the Berkindale Property and the Irvington Property was done by her parents.

[25] I also note that there was some indirect questioning, during testimony, as to whether the Appellant was the beneficial owner of the Property, or whether she merely held legal title for another beneficial owner such as her father. Given the confused history of the Berkindale Property, I asked the parties for further submissions on this point. Neither party took the position that the Appellant was not the beneficial owner of the Property. Indeed, although the Appellant is of the view that she would have had no HST collection obligation if she had merely held legal title to the Property, she expressly denied that she merely held legal title. Further, none of the documentary evidence produced supports the view that the Appellant was not the beneficial owner of the Property. Taking into account this context, I proceed on the basis that the Appellant was the beneficial owner of the Property.

[26] I note that Sonia Mirbaha, a cousin of the Appellant, also testified.

IV. Obligation to Collect HST

A. Credibility, Reliability and Some Overall Impressions

[27] I begin with a comment on the Appellant’s credibility and reliability. The Appellant’s choice of profession and devotion to her craft is admirable and impressive, particularly given that her career has taken her far way from the family and friends with whom she is so close. When discussing her career, the Appellant struck me as very straightforward, and a person who deeply cares for the people – particularly the children - to whom she has devoted her working life. However, I found that the Appellant’s testimony regarding the facts more directly in issue in this Appeal was often vague and sometimes contradictory. Indeed, the Appellant’s testimony regarding the identity of the beneficial owner of the Berkindale Property was inconsistent with the April 14, 2026 Letter. The various changes and inconsistencies in the Appellant’s position over the course of this litigation relating to the ownership arrangements regarding the Berkindale Property were quite harmful from a credibility and reliability standpoint. The fact that the Appellant had not mentioned the potential use of the Property to see private clients until the trial is also of concern.

[28] At a number of points in her testimony the Appellant referred to the “collective” nature of her family, upbringing and culture, and indeed the decision-making process relating to the Property, and at points used the word “we” in relation to decisions made in relation to the various properties discussed here. For example, when discussing the decision to sell the Property, the Appellant referred to the “collective thought” that the Property was not being sold, and so perhaps another real estate agent should be used. In addition, the Appellant testified that she was asked by Enirox to describe her “dream home”, which would serve as the basis for the interior design; there was no evidence to suggest that the Appellant was setting any economic boundaries in respect of Enirox’s mandate, and therefore, by implication, those economic boundaries must have been set by someone else. Presumably those economic boundaries were set by the Appellant’s parents, who financed virtually every aspect of the acquisition, ownership and disposition of the Property. I acknowledge the Appellant’s testimony that she did not ask her father for permission to buy the Property, stating only that they discussed the compatibility of the purchase of the Property with her life goals, but I found that statement to be implausible (unless, in fact, it was her father who directed her to purchase the Property). I further add to these observations the fact that the Appellant stated that she only discovered that she was not, legally, the beneficial owner of the Berkindale Property because her parents informed her of that fact in the course of preparing for this Appeal. Although it is, perhaps, understandable that the Appellant, given her age and stage at the time the Berkindale Property was purchased, would not be fully aware of the legal relationships of which she was a party, this background provides some precedent for the Appellant following the instructions of her parents in respect of significant purchases of property that they financed, and also for the Appellant not having knowledge of all the material facts and considerations surrounding the acquisitions of property discussed at trial. In combination with the vagueness of many parts of the Appellant’s testimony and some of the contradictions in that testimony identified above, I find that the main decisions relating to the Property – namely relating to the acquisition, holding, demolition, construction and the ultimate sale – were, functionally, decisions made in large part, or perhaps exclusively, by the Appellant’s parents and that the Appellant may not have been privy to all of the considerations taken into account by her parents in respect of those decisions. I will return to the significance of these findings below, but note that these findings are not necessarily inconsistent with beneficial ownership of the Property by the Appellant. To borrow concepts from certain aspects of federal income tax law, one might say that the Appellant had de jure control of the Property, but de facto control over major decisions relating to the Property was in the hands of the Appellant’s parents.

B. Legal Background

[29] Under subsection 221(1) of the Excise Tax Act (Canada) (the “ETA”), every person who makes a “taxable supply” must collect goods and services tax (“GST”) or HST payable by the recipient of the supply. A “taxable supply” is defined in subsection 123(1) of the ETA to mean a supply that is made in the course of a “commercial activity”. Under the definition of “commercial activity” in subsection 123(1), an “exempt supply” is excluded from a commercial activity. Section 2 of Part I of Schedule V of the ETA provides that a sale of a residential property by person who is not a builder is an exempt supply unless a number of conditions are met; the Respondent did not argue that these conditions were not met. Rather, the Respondent’s main argument is that the Appellant is a “builder”, and that therefore the sale of the Property by the Appellant is not an exempt supply.

[30] “Builder” is defined in subsection 123(1) of the ETA as follows (in relevant part):

Builder of a residential complex or of an addition to a multiple unit residential complex means a person who

(a) at a time when the person has an interest in the real property on which the complex is situated, carries on or engages another person to carry on for the person

(i) in the case of an addition to a multiple unit residential complex, the construction of the addition to the multiple unit residential complex, and

(iii) in any other case, the construction or substantial renovation of the complex,

(b) acquires an interest in the complex at a time when

(i) in the case of an addition to a multiple unit residential complex, the addition is under construction, and

(ii) in any other case, the complex is under construction or substantial renovation…

but does not include

(f) an individual described in paragraph (a), (b) or (d) who

(i) carries on the construction or substantial renovation,

(ii) engages another person to carry on the construction or substantial renovation for the individual, or

(iii) acquires the complex or interest in it,

otherwise than in the course of a business or an adventure or concern in the nature of trade,

(g) an individual described in paragraph (c) who makes a supply of the mobile home or floating home otherwise than in the course of a business or an adventure or concern in the nature of trade, or

(h) a person described in any of paragraphs (a) to (c) whose only interest in the complex is a right to purchase the complex or an interest in it from a builder of the complex;

[31] The parties agreed that the primary issue here is whether the Appellant sold the Property in the course of a business or an adventure or concern in the nature of trade, as contemplated by paragraph (f) of the definition of “builder” above, and that if the Appellant is found to be a “builder” then HST was exigible on the sale of the Property.

C. Status of the Appellant as a “Builder”/Adventure in the Nature of Trade

[32] Both parties referred me to Happy Valley Farms Ltd. v Minister of National Revenue, (1986) 1986 CanLII 7434 (FCTTD), 7 F.T.R. 3 (F.C.T.D.) for the factors relevant in determining whether an activity should be considered to be an “adventure in the nature of trade”. Those are stated, at paragraph 14 of that decision, as including the following:

1. The nature of the property sold. Although virtually any form of property may be acquired to be dealt in, those forms of property, such as manufactured articles, which are generally the subject of trading only are rarely the subject of investment. Property which does not yield to its owner an income or personal enjoyment simply by virtue of its ownership is more likely to have been acquired for the purpose of sale than property that does.

2. The length of period of ownership. Generally, property meant to be dealt in is realized within a short time after acquisition. Nevertheless, there are many exceptions to this general rule.

3. The frequency or number of other similar transactions by the taxpayer. If the same sort of property has been sold in succession over a period of years or there are several sales at about the same date, a presumption arises that there has been dealing in respect of the property.

4. Work expended on or in connection with the property realized. If effort is put into bringing the property into a more marketable condition during the ownership of the taxpayer or if special efforts are made to find or attract purchasers (such as the opening of an office or advertising) there is some evidence of dealing in the property.

5. The circumstances that were responsible for the sale of the property. There may exist some explanation, such as a sudden emergency or an opportunity calling for ready money, that will preclude a finding that the plan of dealing in the property was what caused the original purchase.

6. Motive. The motive of the taxpayer is never irrelevant in any of these cases. The intention at the time of acquiring an asset as inferred from surrounding circumstances and direct evidence is one of the most important elements in determining whether a gain is of a capital or income nature.

[33] Beginning with the nature of the Property, there is nothing inherent in the Property as originally purchased that strongly suggests that the Property is on income or on capital account to the Appellant. The Property could have been occupied immediately as a residence, or could have been acquired for the purposes of resale. I find that the nature of the Property is a neutral factor.

[34] Turning to the length of ownership, the Appellant bought the Property in March of 2012 and sold it in October of 2015. In some contexts this period of time could be considered to be a neutral factor (see, for example, Abedipour v The King, 2022 TCC 155). However, here I note that (a) the Property was originally listed in April of 2013, (b) the next set of listings began in December of 2014, (c) a good deal of the period between March, 2012 and October, 2015 was taken up with the demolition of the original residence and construction of the new residence and (d) the Property was never occupied by the Appellant. On balance, in this context, this factor suggests that the Property was acquired for resale.

[35] With respect to the frequency or number of similar transactions undertaken by the Appellant, prior to the acquisition of the Property there was only one other acquisition of a residential property put into evidence, and that was the Berkindale Property. Given the confused ownership history of the Berkindale Property and the fact that only one such transaction was put into evidence, I do not find that the Appellant had a pattern of acquiring residential properties for resale.

[36] Regarding work expended on or in connection with the Property, this factor suggests that a sale of the Property was strongly contemplated. The existing residence was demolished and replaced with an entirely new, very large, luxurious residence that could be – and was – sold for a considerable profit. Demolition and construction in and of themselves are neutral factors – it is not uncommon for buyers to purchase a property with the intention of demolishing a residence and replacing it with a new one in which they intend to live as their primary residence, but it is also not uncommon for buyers to purchase a property, demolish the existing residence and construct a new residence for the purpose of resale. The fact that the new residence was so much bigger and more lavish that the original residence is, however, a factor that weighs in favour of the Respondent. The Appellant had testified that there was an expectation in the Iranian community regarding hospitality, and that the new residence she built was consistent with that expectation. However, this explanation is difficult to reconcile with the fact that the original residence was much more modest, and yet the Appellant testified that she did not consider demolition or even material renovation until after she had purchased the Property. It is also difficult to understand why community expectations regarding hospitality would lead to the decision to build a residence for a young and single purchaser that had five bedrooms without further evidence on that point. The Appellant did state that she hoped that the additional bedrooms could be used to see private clients; this is a very optimistic plan for a person who had only recently completed her graduate work and was having trouble getting a job interview in Toronto. Again, I note my findings above regarding the credibility and reliability of the Appellant, and also note that lack of evidence in respect of the design of the house to accommodate the use of bedrooms to see patients. I find that the degree and nature of the work put into the new residence is more consistent with an intention – whether primary or secondary (as will be discussed shortly) – to sell the Property for a profit.

[37] With respect to the circumstances of the disposition of the Property, the Appellant stated that the original listing of the Property in April of 2013 occurred because the Appellant wanted to pursue her employment in British Columbia, and the second set of listings beginning in late 2014 occurred because of her decision to live in Australia. These facts are helpful to the Appellant. I note, however, that they are neutral if one takes the view, as I will discuss below, that there was a secondary intention to resell the Property.

[38] It is the last factor – motive – that is the key consideration in this case. With respect to motive, it is well understood that a property may be an adventure in the nature of trade if there is a “secondary intention” to profit from the relevant property. One of the leading cases on this concept is Canada Safeway Limited v The Queen, 2008 FCA 24, which states the following at paragraph 61:

…First, the boundary between income and capital gains cannot easily be drawn and, as a consequence, consideration of various factors, including the taxpayer's intent at the time of acquiring the property at issue, becomes necessary for a proper determination. Second, for the transaction to constitute an adventure in the nature of trade, the possibility of resale, as an operating motivation for the purchase, must have been in the mind of the taxpayer. In order to make that determination, inferences will have to be drawn from all of the circumstances. In other words, the taxpayer's whole course of conduct has to be assessed. Third, with respect to “secondary intention”, it also must also have existed at the time of acquisition of the property and it must have been an operating motivation in the acquisition of the property. Fourth, the fact that the taxpayer contemplated the possibility of resale of his or her property is not, in itself, sufficient to conclude in the existence of an adventure in the nature of trade. In Principles of Canadian Income Tax Law, supra, the learned authors, in discussing the applicable test in relation to the existence of a “secondary intention”, opine that “the secondary intention doctrine will not be satisfied unless the prospect of resale at a profit was an important consideration in the decision to acquire the property” (see page 337). I agree entirely with that proposition. Fifth, the viva voce evidence of the taxpayer with respect to his or her intention is not conclusive and has to be tested in the light of all the surrounding circumstances.

[39] A recent example of the application of secondary intention in the context of the definition of “builder” under consideration here is Bryan v The King, 2024 TCC 108, where the Court stated at paragraph 31 that “at the time he acquired the lot to build a house at 56 Rideout, he likely had both the possibility of residing there and selling as dual operating motivations. In other words, the acquisition of the property had the dual character of capital and an adventure in the nature of trade; therefore the appellant was a builder within the meaning of subsection 123(1).” [citations omitted]

[40] In considering whether, in this case, the Appellant’s primary motivation in acquiring the Property was to sell it for a profit or whether the Appellant had both the possibility of residing in the Property and selling the Property in mind when she acquired the Property, I found a few facts to be of particular significance. I begin with the fact that the Appellant bought the Property only a few months after she had returned to Toronto from her travels and began her job search in earnest. When she bought the Property she hadn’t received a single job interview, let alone a job offer. To acquire such an expensive Property with so little assurance as to her career prospects in the Toronto area, without any thought as to the possibility of selling the Property should a job in Toronto not materialize, seems implausible. I note as well the speed with which the Property was purchased. The Appellant began looking for a property almost immediately after returning to Toronto, and decided which property should be purchased only two months or so after she began her search. There was no evidence as to why the Appellant chose to buy a property so quickly rather than continuing to live with her parents or renting while she looked for a job. Again, the extreme speed with which such a big decision was made after the Appellant’s return to Toronto suggests that there was at least a large degree of comfort that the Property could be sold if the Appellant did not choose to live there, and perhaps even that resale was the primary motivating factor.

[41] I also considered a number of facts relating to the decision to demolish the existing residence. First, there is the fact that an inspection was not a condition precedent to purchase. It is certainly the case that many properties are bought by purchasers who truly intend to live in the property but who do not do an inspection first. For example, there might be many bidders bidding on the same property, and foregoing an inspection might give a particular bidder a strategic advantage. That being said, the only evidence regarding the reason for the absence of an inspection was that the Appellant could not remember why an inspection was not done. The absence of an inspection strongly suggests that the Appellant (or her parents) was (were) indifferent as to the condition of the original residence because they intended to demolish it regardless.

[42] The fact that neighbouring houses were bought by family friends and were being demolished and renovated is also suggestive of an initial intention of the Appellant (or her parents, as primary decision-makers) to demolish and reconstruct, but I do not have sufficient evidence regarding timing and other surrounding circumstances to draw any firm conclusions on this particular point.

[43] A further set of facts relates to the circumstances under which the decision to demolish was made. The Appellant testified that when she became concerned about the state of the Property, she consulted with Enirox. The fact that Enirox is in the business of demolishing and constructing new homes, and that the Appellant did not provide any evidence regarding any inquiries of other types of experts such as an inspector to assess any potential issues or of any attempt to obtain any estimates to assess the cost of addressing such issues, suggests the Appellant – or her parents, as the real decision-makers in respect of the Property – always intended to demolish the original residence and build a new one.

[44] As well, as stated above, paragraph 4 of the Notice of Appeal states that the Appellant purchase the Property with the intention of constructing a new home.

[45] Given that the Appellant could easily have lived in the original residence for some period of time (as per her testimony), and a new residence could have been built at any time in the future, the intention to demolish upon purchasing the Property suggests a profit-making motive.

[46] I note that the lack of inspection and the circumstances under which the Appellant decided to demolish the original residence would be difficult to reconcile with the Appellant’s testimony regarding her intention to live in the original residence, but for the fact that the Appellant’s testimony was not as clear as it might have been regarding her intentions and given my concerns regarding her credibility and reliability. In respect of the former, I note that the Appellant’s testimony consisted largely of statements describing how she could imagine herself living in the original residence and how she liked the location for various reasons, all of which could have been true even in the absence of a real intention to live in the Property. In other words, evidence of the Appellant’s subjective intentions regarding the acquisition of the Property was not strong.

[47] The Appellant’s testimony was not so much reflective of a person who was actively making very significant life decisions, especially for a person of her age and stage, but rather was reflective of a person who was ready to accept decisions being made for her by her parents. Which brings this narrative back to the point made above regarding my finding, on the basis of the evidence before me, that the Appellant’s parents were the true decision-makers in respect of all material aspects of the acquisition, holding, demolition, construction and disposition of the Property. Had one or both of the Appellant’s parents testified at trial, perhaps some evidence may have been adduced regarding such points as the speed of purchase, the choice to demolish and rebuild and the decision to construct such a large and luxurious residence. However, neither of the Appellant’s parents testified, and therefore no further context was available. This is not a question of drawing an adverse inference regarding the absence of testimony from the Appellant’s parents; rather, I merely observe that there may have been further context that might have been helpful to the Appellant had one or both of the Appellant’s parents testified, but that I am required to base my findings only on the evidence that is actually before me. Accordingly, I attach little weight to the Appellant’s expressions of subjective intention, such as they were.

[48] In addition, the history with respect to the Berkindale Property is instructive. The Appellant testified that the intention was for the entire family to live together in the Berkindale Property while taking care of the Appellant’s mother as she dealt with her health issues, and that the demolition of the original residence and dramatic new construction were designed simply to provide a very comfortable home for the family. Ultimately her mother decided that she did not want to live at the Berkindale Property, and the Berkindale Property was sold for a considerable profit. Regardless of any questions of how the disposition of the Berkindale Property should be taxed, that experience would have demonstrated to both the Appellant and her parents that a newly-built and reasonably luxurious residence could be sold at a healthy profit, whether that be because such a profit was the primary goal or because the primary goal of having family members reside in the property did not materialize.

[49] Taking the foregoing into account, I find that the demolition of the existing residence, construction of the new residence and ultimate sale of the Property for a profit was an operating motivation for the Appellant – as guided by her parents – in acquiring the Property. The evidence is less clear as to whether such motivation was the primary or a secondary motivation; it is plausible that the Appellant’s parents might have been content to finance the Appellant’s occupation of the Property had the Appellant decided to live in Toronto. However, I do not make a finding of fact on that point, and such a finding is not needed given my conclusion that the sale of the Property was at least a “secondary intention” of the Appellant, as guided by her parents. Whether the Appellant’s parents had some hope – whether realistic or not, whether strong or faint – that the Appellant would choose to live in Toronto, I find that the possibility that the Property, with a newly-built luxurious residence in a very desirable location, could be sold at a significant profit was top of mind for the Appellant, as guided by her parents, when the Property was acquired. Accordingly, I find that the acquisition of the Property was an adventure in the nature of trade of the Appellant, that therefore the Appellant was a “builder”, as defined, and that therefore HST was exigible on the sale of the Property.

V. ITC Relating to HST on the Commission

A. Background and Parties’ Positions

[50] The Minister had initially assessed the Appellant’s net tax for the relevant reporting period in the amount of $499,850, reducing it upon reassessment by $225,845.50, comprised of $168,340.63 as an allowable rebate and $57,504.87 of excessive HST collectible on the sale of the Property. The Appellant argues that, if this Court were to find that HST were payable on the sale of the Property, the Appellant is entitled to an additional ITC in respect of the HST paid on the Commission pursuant to subsection 296(2) of the ETA. The Respondent argues that the Appellant is not entitled to an ITC for the HST paid on the Commission on the basis that she is not a “registrant”. The Respondent further argues that the Appellant is not entitled to a rebate against net tax for the HST payable on the Commission under subsections 257(1) and 296(2.1) of the ETA. These points shall be explored in more detail below. For the moment I merely note that there is no dispute between the parties as to the fact that HST was paid on the Commission. Rather, the point in issue focusses almost entirely on a question of law.

B. ITC

[51] Under subsection 169(1) of the ETA as it states in relevant part, a person who acquires a service in a reporting period during which the person is a registrant is entitled to an ITC where the service is acquired for consumption, use or supply in the course of commercial activities of the person.

[52] “Registrant” is defined in subsection 123(1) of the ETA as “a person who is registered, or who is required to be registered, under Subdivision D of Division V”. Subsection 240(1) of the ETA provides that every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for the purposes of the relevant Part, subject to certain exceptions. One of the exceptions in paragraph (b) is where “the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business”. “Business” is defined in subsection 123(1) of the ETA to “include a profession, calling, trade, manufacture or undertaking of any kind whatever, whether the activity or undertaking is engaged in for profit, and any activity engaged in on a regular or continuous basis that involves the supply of property by way of lease, licence or similar arrangement, but does not include an office or employment”. The Respondent takes the view that this definition of “business” does not include an adventure in the nature of trade and therefore as, in the view of the Respondent, the Appellant is a builder as a result of an adventure in the nature of trade, the Respondent is not required to register and therefore is not a “registrant”.

[53] In the Appellant’s written submissions, she argues that she was a registrant for the period between October 1, 2015 and October 31, 2015 because the Minister unilaterally issued a business number to her at the time of issuing the Notice of (Re)Assessment for that period. The Appellant also points to paragraph 21 of the Notice of Appeal, which states that “[i]n issuing the Initial Assessment, the [CRA] unilaterally opened a business number for the Appellant.” In paragraph 1 of the Reply the Respondent admits the facts stated in paragraph 21 of the Notice of Appeal. The Notice of (Re)Assessment itself was introduced into evidence. In the right-hand corner of each page, there is a box that states the date of the notice (October 20, 2022), the business number (nine digits and then RT0002) and the period covered (October 1, 2015 to October 31, 2015). There is no explicit reference in the Notice of (Re)Assessment to registration, nor to a date when such registration would have been effective. No other evidence was adduced regarding registration.

[54] I note that the Appellant does not argue that she carried on a “business”, and has not disputed the Respondent’s view that a “business” for purposes of subsection 123(1) does not include an adventure in the nature of trade. In addition, the Appellant has not provided any argument in respect of subsections 257(1) and 296(2.1) of the ETA. Rather, the Appellant’s basis for disputing the Minister’s denial of an ITC for HST paid on the Commission is solely that the Minister had registered the Appellant retroactively for GST/HST purposes.

[55] Beginning with the Respondent’s premise that a “business” does not include an adventure in the nature of trade and therefore the Appellant was not required to register for GST/HST purposes under subsection 240(1), I note that the architecture of the ETA supports the Respondent’s interpretation. For example, the definition of “commercial activity” in subsection 123(1) of the ETA distinguishes between a business carried on by a person and an adventure or concern of a person in the nature of trade. Accordingly, I agree with the Respondent’s interpretation that the Appellant was not required to be registered as a result of the sale of the Property.

[56] As to the Appellant’s argument that she was registered retroactively by the CRA, the Respondent argues that the existence of a business number does not necessarily indicate that a taxpayer has been registered. It also appears, perhaps, that the Respondent argues that even if the Appellant were registered at some point, it is not clear that the Appellant was registered during the reporting period in which the HST became payable. As noted recently in Fadali v The King, 2026 TCC 86, if a taxpayer is not registered during the relevant period, no ITCs will be available. In this case, the closing of the sale of the Property occurred on October 20, 2015. Accordingly, even if the assignment of a business number by the CRA shows that the Appellant was registered by the CRA around the time when the Notice of (Re)Assessment was sent, ITCs are still not available unless that registration was retroactive to the reporting period that included October 20, 2015.

[57] Neither party provided case law as to whether the provision of a business number by the CRA necessarily meant that the Appellant had been registered, or any additional evidence on the topic.

[58] In Gerlings v Canada (Attorney General), 2024 FC 1892, the Federal Court considered an application for judicial review of the Minister’s alleged decision to register the Appellant for GST/HST purposes. The Appellant had been issued an account number, ending in “RT 001”. A letter from the CRA to the Appellant indicated that the account number had been set up for the relevant real property transaction, and provided some guidance “if you are not a GST/HST registrant…” The Court found that the Appellant had not been registered for GST/HST purposes. The Court stated the following at paragraphs 21 and 22:

As explained by the Respondent's affiant, which I accept, the CRA issued a “Business Number” to the Applicant in order to assess him for unremitted GST/HST on the sale of the house. That action, on its own, did not “register” the Applicant under the ETA , nor does it mean that the Applicant was required to register under s. 240 of the ETA. Indeed, the Minister determined that the Applicant did not need to be registered because his supply of real estate was not in the course of business.

Moreover, the December 10, 2021 letter received by the Applicant is clear that no registration was made: the Account Number was created only for the impugned transaction and the Applicant is under no obligation to file any GST/HST returns. I therefore find that Mr. Gerlings was not registered under s. 241 of the ETA.

[59] This suggests that the issuance of an account number or business number does not necessarily, in and of itself, mean that the relevant taxpayer has been registered.

[60] Subsections 241(1.3) to (1.5) of the ETA contemplate the circumstances under which the Minister may register a taxpayer otherwise than upon the request of the taxpayer. They state as follows:

Notice of intent

(1.3) If the Minister has reason to believe that a person that is not registered under this Subdivision is required to be registered for the purposes of this Part and has failed to apply for registration under this Subdivision as and when required, the Minister may send a notice in writing (in this section referred to as a “notice of intent”) to the person that the Minister proposes to register the person under subsection (1.5).

Representations to Minister

(1.4) Upon receipt of a notice of intent, a person shall apply for registration under this Subdivision or establish to the satisfaction of the Minister that the person is not required to be registered for the purposes of this Part.

Registration by Minister

(1.5) If, after 60 days after the particular day on which a notice of intent was sent by the Minister to a person, the person has not applied for registration under this Subdivision and the Minister is not satisfied that the person is not required to be registered for the purposes of this Part, the Minister may register the person and, upon doing so, shall assign a registration number to the person and notify the person in writing of the registration number and the effective date of the registration, which effective date is not to be earlier than 60 days after the particular day.

[61] In this case, there was no evidence presented to show that the Minister had sent a notice of intent pursuant to subsection 241(1.3). Further, the Notice of (Re)Assessment did not reference registration, nor an effective date of registration. Accordingly, the Appellant has not adduced sufficient evidence to show that the Appellant was registered by the CRA for GST/HST purposes. In addition, as noted above, any such registration would have to have had retroactive effect in order to allow the Appellant to claim ITCs. In this case there is no evidence that the assignment of a business number to the Appellant was intended to have had retroactive legal effect, even though it was issued in reference to a transaction that had taken place in the past.

[62] Accordingly, I find that the Appellant was not registered for GST/HST purposes during the reporting period that included the date when she sold the Property and was not required to be registered, and therefore was not a registrant during the reporting period when the Property was sold. As a result, the Appellant is not entitled to ITCs in respect of HST paid on the Commission.

C. Allowable Rebate

[63] As stated above, the Minister took the position that the Appellant was not entitled to a rebate against net tax for the HST payable on the Commission under subsections 257(1) and 296(2.1) of the ETA. And as stated above, the Appellant made no arguments in respect of these provisions. Nonetheless, I discuss these provisions briefly for the sake of completeness.

[64] Subsection 257(1) of the ETA generally provides a rebate to a person who is not a registrant and who makes a taxable supply of real property by way of sale. The rebate is generally equal to the lesser of the “basic tax content” of the property at the particular time and the tax payable in respect of the particular supply. (Subsection 296(2.1) is the provision of the ETA that contemplates the provision of the rebate by the Minister in the course of assessing net tax.) Here the Minister argues that the definition of “basic tax content” in subsection 123(1) of the ETA does not contemplate tax on the Commission. The text of the provision supports this view. Further, the technical notes to the definition of “basic tax content” state that the “basic tax content” of a person’s property “is generally the amount of tax under Part IX that the person was required to pay on the property and improvements thereto, after deducting any amounts (other than input tax credits) that the person was entitled to recover by rebate, remission or otherwise and after taking into account any depreciation of the property”. Based on my reading of the definition of “basic tax content”, the technical notes and the absence of any argument to the contrary from the Appellant, I find that the HST paid by the Appellant on the Commission did not form part of the “basic tax content” of the Property to the Appellant, and therefore no rebate is available to the Appellant.

[65] For the reasons set out above, I dismiss the appeal.

[66] Costs are payable by the Appellant to the Respondent. The parties shall have until September 8, 2026 to reach an agreement on costs, failing which any submissions by the Respondent with regard to costs shall be served and filed on or before September 18, 2026 and shall not exceed five pages.

Any submissions of the Appellant replying to submissions of the Respondent shall be served and filed on or before September 28, 2026 and shall not exceed five pages. If, by September 18, 2026, the parties do not advise the Court that they have reached an agreement and no submissions by the Respondent are received by the Court, the Respondent shall be entitled to costs in accordance with the Tariff.

Signed this 10th day of August, 2026.

“Lara Friedlander”

Friedlander J.

2026 TCC 147

COURT FILE NO.:

2022-2529(GST)G

STYLE OF CAUSE:

SHADI ASADI AND HIS MAJESTY THE KING

PLACE OF HEARING:

Toronto, Ontario

DATE OF HEARING:

April 20 and 21, 2026

REASONS FOR JUDGMENT BY:

The Honourable Justice Lara G. Friedlander

DATE OF JUDGMENT:

August 10, 2026

APPEARANCES:

Counsel for the Appellant:

Monica Carinci

Rebecca Skinner

Counsel for the Respondent:

Grigor Grigorian

COUNSEL OF RECORD:

For the Appellant:

Name:

Monica Carinci

Rebecca Skinner

Firm:

Aird & Berlis LLP

For the Respondent:

Marie-Josée Hogue Deputy Attorney General of Canada Ottawa, Canada