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GST/HST New Housing Rebate – Why Proving Your Intention to Reside Is Critical
The GST/HST New Housing Rebate, as outlined in section 254 of the Excise Tax Act, offers essential relief to Canadians purchasing a newly built home. To qualify, however, Parliament imposed a strict condition. Under paragraph 254(2)(b), at the time the taxpayer becomes liable or assumes liability under a purchase agreement, the home must be acquired "for use as the primary place of residence of the particular individual or a relation of the particular individual."
CRA often challenges claims on this basis, arguing that taxpayers lacked the required intent at the time they became liable under the purchase agreement. As a result, disputes over this rebate frequently turn on whether there is sufficient evidence—both documentary and testimonial—to demonstrate that the home was genuinely intended to be used as a primary residence.
The Tax Court of Canada's decision in Lisi v. The King (2025 TCC 106) illustrates this challenge. Two brothers, Vince and Jordano Lisi, each bought new homes in Kleinburg, Ontario. Although both sold their homes within months, the Court found that at the time of purchase, they did intend to use the properties as their principal residences.
This case highlights the importance of evidence and credibility in proving residence intent and serves as a reminder that consulting an expert Canadian tax lawyer can help avoid costly disputes with the CRA.
When Life Changes, But Intention Still Counts: The Lisi Brothers and the New Housing Rebate
In 2019, two brothers from Kleinburg, Ontario— Vince and Jordano Lisi —took steps many young Canadians dream of: buying their first homes. With their parents' help, each signed an agreement to purchase a new property in a local subdivision. Their parents paid the deposits, mortgages were arranged, and the plan was for each brother to live close to family while gaining independence.
But life quickly complicated those plans. Vince, only 24 at the time, struggled with severe addictions that made moving into his new home at 59 Galen Crescent, purchased for about $1,163,000, unsafe. He required hospitalization and long-term rehabilitation, and within a few months, he sold the property in April 2021 for $1,687,500 without ever living there.
Jordano, two years younger, moved into his new house at 27 Ryerson Drive, bought for just over $1,030,000, with his girlfriend, Jade. They furnished it, signed utility contracts, and even remodelled parts of the home. However, the pressures of living together in their early twenties strained the relationship, and after just six months, Jordano also decided to sell it in November 2021 for $1,900,000.
When both brothers claimed the GST/HST New Housing Rebate—worth $24,000 each—CRA refused. According to the CRA, neither Vince nor Jordano truly intended to use the homes as their primary residences. What followed was a legal battle that forced the Tax Court to decide whether initial intent outweighed the reality of quick sales.
How CRA Viewed the Lisi Brothers' Intent – And Why expert Canadian tax lawyer Advice Matters
CRA denied both $24,000 rebates claimed by Vince and Jordano Lisi, taking the position that the brothers were never genuine homebuyers. To support this assessment, CRA raised three main points:
- The brothers lacked the financial means to maintain the homes as primary residences.
- Their family had a history of selling properties for profit.
- Vince and Jordano entered the transactions with the intention to resell.
These arguments illustrate the type of positions CRA may take when denying a rebate based on intent. For taxpayers, this highlights a crucial lesson: documenting your circumstances carefully and seeking early guidance from an expert Canadian tax lawyer can make the difference between a denied rebate and a successful claim.
Lessons from the Tax Court
In the end, the Court found that CRA's arguments had no factual foundation. While CRA alleged that the brothers lacked financial means and were motivated by profit, it produced no credible evidence to support those claims. By contrast, the taxpayers and their witnesses provided testimony that the Court accepted as reliable, demonstrating that they intended to reside in their homes at the time of purchase.
The outcome underscores two crucial lessons. First, CRA can and will deny a rebate if it believes intent is lacking, but CRA must substantiate its position with evidence. Second, for taxpayers, credibility and documentation are essential. Quick sales or unexpected life changes do not necessarily eliminate eligibility if the original intent to reside can be proven.
For Canadians navigating complex rebate or credit rules, this case highlights the importance of consulting an experienced Canadian tax lawyer before a dispute arises. Professional tax guidance at the planning stage, combined with careful records of your circumstances, can prevent unnecessary challenges and provide the strongest defence if CRA questions your claim.
Pro Tax Tips – Practical Guidance for Homebuyers
- Document Your Intention Early: Keep clear records showing that you intended to make the property your home—utility contracts, moving invoices, insurance policies, and even photos of the furnished property can help. A top Canadian tax lawyer can guide you on what carries the most weight if CRA reviews your claim.
- Life Changes Do Not Erase Initial Intent: Circumstances such as illness, relationship breakdown, or employment changes may force you to sell sooner than expected. These events do not automatically disqualify you if you can demonstrate that you genuinely planned to reside in the property at the outset.
- Prepare for CRA Scrutiny: CRA often challenges New Housing Rebate claims based on intent. Seeking seasoned Canadian tax lawyer advice early ensures your documentation is complete, your story is consistent, and you are ready to substantiate your claim if questioned.
FAQs
If I sell my home within a year, will CRA automatically deny the New Housing Rebate?
No. As the Tax Court confirmed in Lisi v. The King (2025 TCC 106), the critical factor is whether you intended to reside in the home when you purchased it. Quick sales may raise questions, but they do not automatically disqualify you if you can prove your original intent.
What kind of documents should I keep to prove that I intended to live in my new home?
Keep records such as signed utility contracts, internet and cable agreements, property insurance policies, receipts from the moving company, and records of renovation or furnishing expenses. These documents demonstrate real steps toward establishing the property as your primary residence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
