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Overview: You Built Your Dream Home—Why Did the CRA Charge GST?
The decision in Braich v. The King (2026 TCC 117) is an important reminder that the courts will look beyond what a property owner says about a house and instead examine the surrounding facts. In this case, the Tax Court of Canada had to decide whether a husband and wife built a home as a permanent family residence or whether the project was actually a business venture carried out for profit. The answer to that question determined whether Goods and Services Tax (GST) applied to the property under the Excise Tax Act.
The Court ultimately dismissed both appeals and agreed with the Canada Revenue Agency (CRA) that the taxpayers were “builders” for GST purposes and therefore had to pay the assessed GST.
As David Rotfleisch observes, “A taxpayer’s intention is important, but intention alone is rarely enough. The courts expect that intention to be supported by objective evidence and consistent conduct.”
Facts of the Case in Braich v. The King
Mr. and Mrs. Braich purchased a vacant lot in Surrey, British Columbia, in 2016 with the stated intention of building a permanent family home. At the time, the family consisted of Mr. and Mrs. Braich and their two children, making it a family of four. Construction was completed in September 2017.
The house measured approximately 5,650 square feet and included nine bedrooms, nine bathrooms, multiple entertainment areas, and a separate self-contained living unit. Although the couple maintained that the property was intended as a family residence, the house was substantially larger than what would ordinarily be expected for a family of four, and the size, layout, and design later became significant factors in the Court’s assessment of the property’s true purpose.
During construction and after completion, the family experienced several problems in the neighbourhood. According to the evidence, there was a murder across the street, neighbours were allegedly involved in criminal activity, and the family experienced harassment and safety concerns. Mr. Braich also worked as a long-distance truck driver and was frequently away from home. Because of these circumstances, most family members rarely occupied the house, and the family eventually decided that the neighbourhood was unsuitable for long-term living.
Nine months after construction was completed, Mr. and Mrs. Braich purchased another residence in Surrey. They later listed the newly built property for sale and sold it in 2019 for approximately $1.65 million, earning a profit of more than $300,000.
The evidence presented at trial also showed that there was little objective evidence that the property had ever become the family’s genuine primary residence. Common documents normally used to demonstrate occupation—such as moving receipts, updated driver’s licences, health card changes, furniture delivery records, and similar documents—were not produced. The home also remained in unusually pristine condition, resembling a display home rather than one that was regularly lived in.
The Court also considered the couple’s history of purchasing, constructing, and selling several residential properties over roughly two decades. This history formed part of the factual background that the Court relied upon when assessing whether the construction of the house formed part of a profit-making venture rather than the creation of a permanent family residence.
The CRA assessed GST on the sale, arguing that the couple were “builders” under the Excise Tax Act because the house had been constructed in the course of a business or an adventure in the nature of trade.
The Legal Issue in Braich v. The King
The main legal question was whether the house had been built primarily as a family home or as part of a profit-making venture.
Under the Excise Tax Act, an individual who constructs a residential property while carrying on a business or an adventure in the nature of trade is considered a builder. Such a builder may be required to account for GST even if the property is not sold immediately. The Court therefore had to determine the taxpayers’ true intention when the property was acquired and built.
The Court’s Reasoning in Braich v. The King
Justice Bocock relied on the legal test established in earlier cases, particularly Wall v. HMQ and Happy Valley Farms Ltd. v. MNR. The Court considered several factors, including the nature of the property, the length of ownership, previous real estate transactions, the work done on the property, the circumstances leading to the sale, and the taxpayers’ overall motive.
The Court found that the unusually large size and design of the house, together with the couple’s history of repeatedly buying, building, and selling residential properties, pointed toward a commercial purpose rather than long-term family occupation.
The Court also found that there was little objective evidence showing that the house had truly become the family’s primary residence. Common documents such as moving records, updated driver’s licences, health card changes, utility records, or furniture delivery receipts were missing.
Although the Court accepted that neighbourhood problems may have existed, those circumstances did not outweigh the objective evidence suggesting that the property had been built with a profit-making purpose.
David Rotfleisch notes, “One of the most important lessons from this decision is that courts place significant weight on objective evidence. Taxpayers should never assume that personal testimony alone will establish the intended use of a property.”
Significance of the Tax Court’s Decision in Braich v. The King
This judgment demonstrates that tax cases involving residential property depend heavily on objective evidence rather than personal explanations. A taxpayer’s stated intention is important, but it must be supported by conduct and documentation.
The decision also shows that a person does not have to be a professional home builder to be treated as a builder under the Excise Tax Act. Even an individual building a personal residence may fall within the statutory definition if the surrounding facts show that the construction was really part of a commercial venture.
Another important lesson is the value of maintaining records. Evidence such as utility bills, moving receipts, official address changes, and proof of everyday occupation can become crucial if the primary use of a property is later questioned.
Conclusion: Flipping vs. Living – The costly tax lesson every property builder needs to know
The decision in Braich v. The King reinforces the principle that courts will examine the entire course of conduct when deciding whether a property was built as a home or as a business venture. Although the Braich family argued that unforeseen neighbourhood problems forced the sale, the Court concluded that the overall evidence pointed to a profit-making purpose from the beginning. As a result, the taxpayers were treated as builders under the Excise Tax Act, the GST assessments were upheld, and both appeals were dismissed.
The case serves as a useful warning to anyone constructing residential property. A genuine intention to live in a home should be supported by consistent actions and reliable documentary evidence. Without such evidence, even a house described as a family residence may be viewed by the courts as part of a taxable commercial activity.
As David Rotfleisch, a certified Specialist in taxation, concludes, “Building a home for your family does not automatically protect you from GST. If your conduct and records tell a different story, the CRA—and ultimately the courts—may conclude that you were carrying on a profit-making venture.”
Pro Tax Tips: Keep Strong Evidence That a House Is Your Home
If you build a house intending to live in it as your primary residence, keep clear records that support that intention. Save moving receipts, utility bills, driver’s licence updates, insurance records, furniture purchases, and other documents showing you genuinely occupied the home. Simply saying you intended to live there may not be enough if the Canada Revenue Agency questions your position. A tax lawyer can advise you on the types of evidence that best support your case and help organize your records before any dispute arises.
Frequently Asked Questions (FAQs):
What Evidence Should You Present to Show That a House Was Your Primary Residence for GST Purposes?
Simply claiming that a house was your primary residence is not enough. You should provide objective evidence showing that you genuinely lived there as your main home. Examples include moving receipts, updated driver’s licences, health cards showing the new address, utility bills, furniture delivery receipts, insurance documents, and other records demonstrating regular occupation. In this case, the taxpayers did not produce this type of evidence, which weakened their claim. The Court in Braich v. The King found that photographs and personal testimony alone were insufficient to prove that the house had been used as a primary residence.
What Features of a House Does the Court Consider When Determining Whether It Was Built as a Primary Residence?
The Court considers whether the size, design, layout, and overall features of the house are consistent with normal family living or whether they suggest that the property was built mainly for resale or profit. In Braich v. The King, the house measured about 5,650 square feet and contained nine bedrooms, nine bathrooms, multiple entertainment areas, and a separate self-contained living unit. The Court concluded that these features made the property appear more suitable for marketing to large or multi-generational families than for serving as a long-term home for a family of four.
How Does the GST Self-Supply Exemption Under the Excise Tax Act Apply to Builders Who Occupy Newly Constructed Homes?
Under the Excise Tax Act, the GST self-supply exemption may apply to builders who occupy newly constructed homes if the home qualifies as an occupied used residential property. Generally, a builder who first occupies a newly constructed home is deemed to have sold the home to himself or herself and may have to account for GST. However, this GST obligation does not apply if the builder (or a related individual) genuinely occupies the home as a primary residence and the property was not built mainly as part of a profit-making venture. In Braich v. The King, the Court found little objective evidence that the house had ever been genuinely occupied as the family’s primary residence. Most family members rarely lived there, important documents proving residence were missing, and the home remained in pristine condition, resembling a display home rather than one that was regularly lived in. As a result, the Court held that the property did not qualify as an occupied used residential property for the GST self-supply exemption.
Does a person have to be a professional home builder to be considered a builder under the law?
No. A person who builds a house as part of a business or profit-making venture can be considered a builder under the Excise Tax Act, even if they do not operate a construction business.
What factors does the court consider in deciding whether the disposition of a home is on account of a business?
The factors considered by the court in making this decision are not exhaustive. They include the nature of the property, how long it was owned, the number of similar transactions, the work done on the property, the reasons for selling, and the owners’ overall motive. The court looks at all these factors together instead of relying on only one.
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.
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