The appellant appealed a GST assessment and failure to file penalty related to the purchase of a building with a vacant commercial first floor and a residential second floor.
The appellant argued the first floor was an exempt supply because he intended to convert it to a residential apartment.
The Tax Court held that the first floor was not a residential complex at the time of sale and was previously used in a commercial activity, making the supply taxable.
However, because Revenu Québec retroactively cancelled the appellant's GST registration, he was not required to file a return under subsection 228(4) of the Excise Tax Act.
The appeal was allowed in part to vacate the failure to file penalty, while the GST assessment was upheld.
