1542921 Alberta Ltd. Applicant - v. -, 2016 ABQB 381

Court of Queen ’ s Bench of Alberta Citation: 1542921 Alberta Ltd v Calgary (City), 2016 ABQB 381 Date: 20160707 Docket: 1401 09528 Registry: Calgary Between: 1542921 Alberta Ltd. Applicant - and - City of Calgary and City of Calgary Assessment Review Board Respondents _______________________________________________________ Reasons for Decision of the Honourable Chief Justice Neil Wittmann _______________________________________________________ Introduction [ 1 ] The taxation of real property in Alberta by municipalities is governed by the Municipal Government Act, RSA 2000, c.M-26 (“the MGA”).

Pursuant to the MGA, an assessor assigns a value to the real property in question (“the Property”), in this case a self-

storage building located at 3000 – 1800 – 194 th Avenue SE, in the City of Calgary (“the City”). Pursuant to the MGA and a City Bylaw, a tax rate is applied to the assessed value to determine the property tax owing from year to year by the tax payer. The higher the assessed value, the greater the tax payable at any given tax rate. [ 2 ] The Applicant seeks permission to appeal the decision of a Calgary Assessment Review Board (“ARB”), CARB 75718P- 2014 (“the Decision”).

The ARB consists of three persons, one of whom is the Chair. [ 3 ] Three other ARB Decisions are included in the Application for Permission to Appeal, namely: CARB 75721P-2014 (1542921 Alberta Ltd), CARB 75757P-2014 (Tricycle Lane Ranches Ltd), and CARB75756P-2014 (Tricycle Lane Ranches Ltd.). All four decisions were issued by the same ARB panel. The parties agreed that this Application for Permission to Appeal need only reference the Decision, because the result is applicable to all four proposed appeals. [ 4 ] The applicable statutory provisions are attached as Appendix A to these Reasons.

Appendix A includes the relevant provisions from the MGA , the Matters Relating to Assessment and Taxation Regulation (“the MRAT”), Alberta Regulation 220/2004, the Excise Tax Act, RSC 1985, c.E-15, the Income Tax Act , RSC 1985, c.1 (5 th Supp.). [ 5 ] This Application concerns two issues. First, the calculation of the “market value” of the Property for purposes of the 2014 Property Tax Assessment by the City.

The central issue here is whether the Goods and Services Tax (“GST”) notionally attributed to a component of the Property should be included in determining the “market value” of the Property using the cost approach for the purposes of the property tax assessment. The second issue is whether the Applicant was treated fairly by the ARB in terms of its procedure. The Decision [ 6 ] The ARB described the Property as being constructed in 2011, used as a self-storage building.

According to the cost approach to determine market value, using the Marshall and Swift Estimator, the land was valued at $1,884,980 and the improvement at $6,526,059 for a total of $8,411,039: the Decision, para 3. The issue before the ARB was whether the City Assessor ought to have deducted 5% for GST, which had been included in the Marshall and Swift calculation. The Marshall and Swift methodology and calculation of market value using the cost approach is not disputed by any party with the exception of the GST issue. [ 7 ] The Decision confirmed the assessment of $8,410,000.

Both the Applicant and the City referred to the MRAT . [ 8 ] After finding that the legislative mandate of the ARB was to determine the correct, fair and equitable market value of the Property, the ARB panel found that there was “insufficient market evidence and information to demonstrate the GST is not part of the market value of the Property”: the Decision, para 26. The Decision focused on the issue of evidence, not the issue whether, as a matter of law, the inclusion of 5% GST in Marshall and Swift calculation, was proper.

The Law [ 9 ] As indicated, there are many layers of law and regulations relevant to the issue. They include the MGA , the MRAT , the Excise Tax Act , the Income Tax Act . The onus is on the Applicant to persuade this Court that Permission to Appeal the Decision of the ARB ought to be granted.

Section 470(5) of the MGA refers to a judge of this Court granting permission to appeal if the judge is of the opinion that “the appeal involves a question of law or jurisdiction of sufficient importance to merit an appeal and has a reasonable chance of success.” Analysis: GST Issue [ 10 ] During oral argument, it was stated that there were at least 27 decisions in Calgary where the ARB found in favour of complainants with respect to the inclusion of the GST, and in 15 of those decisions the City has filed a permission to appeal application in this Court.

Further, the applicant submitted that this was a question of significant importance in 2014, on the basis there were allegedly between 70 and 80 files where the inclusion of GST was in issue in Alberta, including 49 in Edmonton. The inclusion or exclusion of GST is apparently inconsistent throughout Alberta in utilizing the cost approach to determine market value of commercial property for municipal tax purposes. [ 11 ] A self-storage property would be used in the context of a “commercial activity” as that phrase is defined in

Part IX of the Excise Tax Act . The Applicant would be a “Registrant” under

Part IX of the Excise Tax Act . The cost approach used by the City is a proxy to determine the market value of the Property for property tax assessment purposes. In doing so, variables are aggregated. One is the value of the land. The second is the “depreciated cost – replacement value” of the improvements, the definition of which was not fully argued by the parties. It is probably not necessary to determine that definition for the purposes of this analysis. Depreciated cost is historical, whereas replacement value refers to the amount that would have to be incurred to replace the asset at the present time.

The third variable is the notional amount in respect of the 5% GST. [ 12 ] The City provided the ARB with market evidence to support its assessment of the property in the form of 13 sales transactions which allegedly illustrated that the removal of the 5% for GST would result in an inferior assessment. The City presented its evidence by reviewing property tax assessments that used the cost approach and then compared the actual sales price to the assessed value and calculated the Assessment to Sale Ratio (“ASR”). If a ratio of 1.0 was achieved, the assessment and sales prices are identical.

Here, according to the Decision, with the median and average ASR with the GST included or removed, the ASR was not materially different: the Decision, para 21, 31.

[ 13 ] The first issue is whether the current dispute involves a question of law. Jurisdiction is not in dispute in this case. A question of law depends on the nature of the dispute. A question of law exists where the inquiry concerns the correct statement of the applicable law, whether it is statutory or jurisprudence: Housen v Nikolaisen [2002] SCR 235 at paras 27, 34, 35, 36. [ 14 ] Nowhere in the Decision is there an analysis of the Excise Tax Act , the Income Tax Act or the Income Tax Regulations , CRC, c. 945 (collectively, “the Tax Statutes”).

There is extensive reference to arguments being made before the ARB by the City that the GST is not always refunded, is charged in a real-estate transaction, that it had become accepted practice for almost all large municipalities when using Marshall and Swift to not delete 5% for GST. Similarly, the ARB references the Applicant’s arguments that it was a GST registrant and can claim input tax credits and all construction costs. Reference was made to a number of so-called “authoritative Court cases from Alberta and across Canada relevant to the issue”: the Decision at para 12.

The ARB Reasons for Decision begin at para 25 and conclude at para 35. Each paragraph begins with the phrase “The Board finds ...”. Much of the Reasons deal with insufficient market evidence and information to “demonstrate that GST is not part of the market value of a Property”: the Decision at para 26. Also, reliance is placed by the Board on the fact that it “would be inequitable ... to not include GST because the City consistently includes it”: the Decision at para 32. [ 15 ] In the Decision, there was not any analysis of, nor a reasoned

interpretation of, the Tax Statutes in considering the inclusion or exclusion of GST. Although couched in terms of a lack of evidence, there was no determination in the Decision that, as a matter of law, the notional GST should or should not be included in the context of the property tax assessment for a commercial property using the cost approach to determine market value. [ 16 ] It should be noted that s. 293(1) of the MGA directs the City Assessor to apply the valuation standard set out in the Regulations. The relevant

section here is s. 6(1) of the MRAT . That standard is referred to as the “market value”. But market value for property tax assessment purposes typically involves the use of a property. It can be the income approach, it can be the comparable sales approach, or it may be, as was used here, the “cost approach”. [ 17 ] The use of the cost approach here was not contested. What is in dispute is whether the particular variable, GST, should or should not be included in the cost approach calculation.

That is a question of law. [ 18 ] The second matter for determination in considering whether to grant Permission to Appeal is whether the question of law is of sufficient importance to merit an appeal. [ 19 ] In Edmonton East (Capilano) Shopping Centres Limited (AEC International Inc) v Edmonton (City) , 2012 ABQB 445 , Michalyshyn J at para 22 referenced Associated Developers Limited v Edmonton (City) , 2011 ABQB 592 where Ross J suggested that an issue may be of sufficient importance to merit an appeal if the importance went to jurisprudential purposes, which I take to mean precedential value.

He went on to say that the importance was to be determined on an objective test, not subjectively, without specific reference to the Applicant or the specific fact situation surrounding the Applicant.

He concluded that generally there should be something unsettled about the question or that the Decision should have wide ranging implications. [ 20 ] On the basis of the uncontradicted submissions of counsel as to the uneven application of the inclusion of GST in the cost approach in assessing commercial properties in Alberta, any decision as to whether GST ought to be included or excluded would have wide ranging implications.

Also, in terms of the mandate that assessments be fair and equitable, it is neither fair nor equitable to have inconsistent decisions on the inclusion or exclusion of GST, founded on varying

interpretations of the Tax Statutes, the MGA and the MRAT. [ 21 ] Thus, I find that the second criteria is satisfied. That is, that the question of law posed is of sufficient importance to merit an appeal. [ 22 ] The third aspect of the test is whether there is a reasonable chance of success on appeal. [ 23 ] The mandate of the City Assessor is to determine the “market value” for the Property.

As stated above, this mandate arises from the application of a combination of s. 293 of the MGA and s. 6(1) of the MRAT . [ 24 ] The fact that the city levies its property tax assessment based on “market value” is not in dispute. What is in dispute is the methodology that should be applied for the purposed of calculating “market value” using the cost approach. In particular, the focus of the dispute concerns the inclusion or exclusion of a particular variable, namely GST. [ 25 ] In any assessment for property tax purposes, a municipality must determine the “market value” by way of a proxy.

Various methodologies can be applied, the most common being the use of the: a. comparable approach; b. income approach; or c. cost approach. [ 26 ] The City here has selected the “cost approach” as its preferred methodology. Having made that selection, the City must then decide the components (or variables) that are to be used in the “cost approach”. The aggregate of those variables become the proxy for the “market value” for property tax assessment purposes. [ 27 ] The “cost approach” is often used when there is a lack of market activity, which limits the practical availability of sales comparables.

The cost approach is most accurate where land values are well supported, and improvements represent the best use of land.

[ 28 ] The theory underlying the “cost approach” is that a buyer will not pay more than what it would cost to reproduce or replace the Property. The “cost approach” enables the City to calculate the “market value” by reference to the current cost of land, labour, materials, related fees and any entrepreneurial profit that wold be ordinarily embedded in that cost. [ 29 ] The “cost approach” applied by the City Assessor aggregated the value of the real property with the “depreciated cost- replacement value” of the structure that has been built on that land.

The inclusion of those two variables in the cost approach is consistent with s. 6(1) of the MRAT , which specifically refers to land and improvements . However, in addition to those two variables, the City Assessor also included the 5% GST embedded in the Marshall and Swift calculation. [ 30 ] The City Assessor justified the inclusion of the GST in the “cost approach” in respect of the Property on the basis that there was not sufficient market data or other information in evidence to illustrate that the GST was not part of the “market value” of the Property.

This approach is akin to a negative confirmation inquiry. [ 31 ] On appeal, the ARB was guided by s. 467(3) (

a) of the MGA . That statutory provision provides that the Board must not alter any assessment that is fair and equitable, taking into consideration the valuation and other standards set out in the regulations. [ 32 ] The question in issue is the meaning of value, or, as set out in s. 6(1) of the MRAT , “market value”.

Perhaps another way to frame the question is to ask whether a “value added tax” such as the GST should be embedded in the cost of the Property for purpose of determine its “market value” for property tax assessment purposes. [ 33 ] A brief review of the history underlying GST policy will assist the Court. One of the conceptual underpinnings of the GST was to avoid tax on a tax, which is sometimes referred to as “tax cascading”.

If the GST amount was included in the “cost approach” for property tax assessment purposes, that would result in cascading tax (albeit through the application of two different taxing regimes). [ 34 ] In considering what is meant by “market value” in a larger context, I note that, under the provisions of the Excise Tax Act , GST is calculated by reference to the “value” of the consideration for the supply: see s. 165(1) of the Excise Tax Act . For GST purposes, it has long been accepted that the value of consideration excludes the GST levied in respect of that supply.

That being the case, GST is not part of the “value” for purposes of calculating the GST. [ 35 ] In addition to not being part of the “value” for purposes of calculating the GST, that tax also does not become part of the cost amount (or cost base) of certain property for income tax purposes if that property is acquired in the context of “commercial activities”. To best understand this, it is necessary to review the nature of the subject property and the framework of

Part IX of the Excise Tax Act . [ 36 ]

Part IX of the Excise Tax Act does not apply GST in the same fashion to all goods and services. As an example, GST does apply to, and become embedded in the cost of, some new residential housing units. However, that occurs only once, and then the residential property becomes exempt. [ 37 ] In contrast, the framework of

Part IX of the Excise Tax Act is such that GST incurred in the context of a “commercial activity” is fully recoverable through the input tax credit mechanism . Consistent with this theory, GST incurred in respect of real property that is used in a commercial activity is recoverable through the input tax credit mechanism that is provided for in the Excise Tax Act. [ 38 ] The Property is a self-storage building facility located in Calgary. By definition, the Property is used in a business pursuit that would constitute a “commercial activity” for purposes of

Part IX of the Excise Tax Act . That being the case, any GST incurred in respect of the Property is recoverable through the input tax credit mechanism. [ 39 ] It must also be noted that GST determinations under the Excise Tax Act have corresponding implications under the Income Tax Act . The underlying concept is that any GST incurred is initially added to the “cost amount” of an asset for income tax purposes. This is the case whether the subject property is depreciable property (such as a building) or non-depreciable property (such as land).

If that GST is either recovered or recoverable under the input tax credit mechanism, it will be removed from the cost of the property for income tax purposes. This addition and possible elimination of the GST from the “cost amount” for income tax purposes occurs by operation of law under the provisions of the Income Tax Act . [ 40 ] That the Income Tax Act removes the GST from the “cost amount” supports the argument that no GST should be included in the value of the Property for purposes of the property tax assessment.

The foundation underlying this argument is that if the GST is fully recoverable under the input tax credit mechanism provided for in the Excise Tax Act and is correspondingly removed from the “cost amount” of the Property for income tax purposes, it is effectively a flow-through item which provides no value added to the asset. That being the base, the GST should not be included in the “cost approach” for purposes of calculating the “market value” for property tax assessment purposes. [ 41 ] In

summary, the legislated framework for income tax cost amount and property tax cost approach should be treated in a parallel manner, unless there is a strong policy reason not to do so. [ 42 ] Before concluding on the GST issue, I should state that I am acutely aware that the appeal will involve the application of a standard of review on the question of law in issue. In Edmonton East (Capilano) Shopping Centres Limited v Edmonton (City) , 2015 ABCA 85 , leave to appeal granted [2015] S.C.C.A.

No. 161, the standard of review applied to decisions of ARBs in Alberta was stated to be correctness in interpreting provisions of the MGA : para 31. The question of law on the GST issue will involve a consideration of the Taxing Statutes, in addition to the home or enabling statute of the ARB, namely the MGA.

Whether the standard of review as articulated by the Alberta Court of Appeal at present is varied by the Supreme Court of Canada from correctness to reasonableness, I am of the view that on either standard, there is a reasonable chance of success. [ 43 ] In conclusion on the GST issue, I have determined that there is a question of law of sufficient importance to merit an appeal and that there is a reasonable chance of success.

In the unique circumstances of this case, the analysis of a reasonable chance of success should, in my view, be given less weight because, regardless of the outcome, the answer will settle the law throughout Alberta. I therefore grant Permission to Appeal on the GST issue.

Procedural Fairness [ 44 ] The Applicant submits that the hearing before the ARB was procedurally unfair, that the unfairness in the circumstances constitutes a question of law of sufficient importance to merit an appeal and has a reasonable chance of success. In the Applicant’s primary brief, it is alleged that the ARB prohibited the Applicant from questioning the City about materials in Exhibit R-1 and prohibited the Applicant from speaking to issues in the Applicant’s rebuttal, which issues were raised in Exhibit R-1.

Exhibit R-1 was filed with the Court as “Supplementary Materials.” It was entered as an Exhibit at the ARB hearing but the Chair allegedly refused to allow the Applicant to raise the issues arising from Exhibit R-1 in its rebuttal package. [ 45 ] The City acknowledges in its brief that procedural fairness can constitute a question of law, but says that there is nothing to suggest that the question arises here because the ARB has broad discretion to determine admissibility, relevance and weight of any evidence it considers; that its written reasons do not have to be perfect and that on the record presented to the Court, there is no indication that the ARB in fact prevented the Applicant from questioning on the materials they wished.

Nor was the Applicant prevented from arguing about any of those materials. The ARB submitted an extensive review of the authorities in relation to adequacy of reasons and procedural fairness, including the standard of review applicable. During the oral hearing, it became apparent that the transcript, which should show or clarify whether the ARB denied the opportunity to question or argue certain issues was not before the Court.

The parties were given an opportunity to submit Supplementary Briefs and materials on this issue, including excerpts from the transcript. [ 46 ] The materials submitted included a Supplementary Brief of the Applicant and a so-called “Informal Transcription of Parts of the Hearing”. The Supplementary Brief of the Applicant contains excerpts from the transcript that, according to its submissions, demonstrate four points as follows: 1. The Applicant asked the Chair if questions could be asked about some pages of materials in Exhibit R-1 from 250 to 303 (the “CRA [Canada Revenue Agency] materials”).

The Applicant wanted to know if it should ask questions of the City Assessor or Counsel for the City. According to the Applicant Counsel for the City said that questions may only be addressed to the City Assessor. 2. At the conclusion of the City Assessor’s evidence, the Applicant asked why the CRA materials were not addressed by the Assessor and Counsel for the City indicated that those materials were part of Exhibit R-1 entered into evidence. The Applicant submits in another portion of the transcript, Counsel for the City says that they are somehow not evidence, but instead information and argument. 3.

During the Applicant’s questioning of the City, the Applicant attempted to ask a question about page 111 of Exhibit R-1 and Counsel for the City refused to allow the City Assessor to answer on the basis that pages 111 onwards were not evidence and would be addressed once she spoke to “argument.” It is submitted the Chair agreed at that time and prohibited the Applicant from asking questions about the materials. 4. The Applicant’s final rebuttal attempted to address the CRA materials and Counsel for the City asked the Chair to prohibit any submissions on this material on the basis that “Mr.

Chairman I thought that was information neither one of us was allowed to speak to” and the Chair allegedly agreed with Counsel for the City. [ 47 ] In response, the City’s Supplemental Brief disputes that the Informal Transcript is complete, nor are there sufficient portions to understand the full context of the issues and alleges certain errors in the transcript. The City relies on s. 37 of the Calgary Assessment Review Board Policies and Procedural Rules (“the ARB Rules”) which seems to divide evidence and argument but allows questioning by both sides and the ARB, on the evidence.

The City makes the point that none of the materials, including the legal submission or a number cases from the CRA website, constitute evidence of the City and rather constitute an argument. Page 111 of Exhibit R-1 is a page directly from the City’s written legal argument, according to the City’s submission, and the City takes the position that the City witness was not to be questioned on the argument. Moreover, the City indicates, in some excerpts from the transcript, that the Applicant did in fact ask some questions about the CRA materials, without objection.

Analysis: The Procedural Fairness Issue [ 48 ] As stated above, the Respondent City has acknowledged the procedural fairness can constitute a question of law but it has cautioned the Court that that kind of question does not arise in this instance. The ARB Rules set out a number of matters referencing procedural fairness generally. For example, s. 3 states:

(3) A member shall, in all instances, apply the rules of natural justice and procedural fairness concerning matters which come before the Board. [ 49 ] Included in the ARB Rules are a number of sections relating to the conduct of hearings. Also, there is a statement in paragraph 34 that the ARB is not bound by the rules of evidence applicable to Court proceedings.

In terms of the conduct of a hearing and the order of presentation, there is clearly set forth in paragraph 37: the presentation of evidence, the ability of an opposite party and the ARB to question as well as time including rebuttal evidence and questioning. Also, there is an order for argument and reply. [ 50 ] On the basis of the supplemental materials and briefs presented on the record before me, I do not find that a question of law arises. If I am wrong on that issue, I do not find that it is of sufficient importance to merit an appeal because there is nothing novel or unsettled about the question.

The difficulty presented in the Applicant’s position is that the evidence before me does not establish that the Applicant was prohibited from questioning to the extent that fairness was engaged. The document was entered as an exhibit and presumably the ARB, not being bound by the rules of evidence could, if it desired, refer to any matters in the exhibit, or not. There was never any clear advancement of the exhibit as “evidence”.

It contains, in part, an excerpt from a pamphlet ostensibly prepared by Municipal Affairs Alberta, entitled Property Assessment Valuation Standards in Alberta, Comparable Property Market Information , the Legal Submission of the City of Calgary at the hearing referencing a number of authorities, both Court decisions and ARB decisions, reference to the Construction Cost Reporting Guide, the excerpts from the website of the Canada Revenue Agency.

[ 51 ] I agree with the Respondents that the exhibit largely consists of argument not evidence or at the very least casts doubt about which was which, when presented to the ARB. [ 52 ] Finally, in consideration of the three-part test, if I am wrong on the first two elements, the impact of the ARB failure as alleged by the Applicant must affect the outcome. It is not clear that it did. [ 53 ] Therefore, I find that the criteria for Permission to Appeal on the procedural of fairness issue has not been met, and I decline to grant Permission to Appeal on this ground.

Conclusion [ 54 ] Permission to Appeal the Decision is granted to the Applicant on the following question of law: Using the cost approach to the assessment of market value of a commercial property involving a GST registrant tax payer, is an Assessor required to exclude GST? [ 55 ] Pursuant to s. 470(6) of the MGA , the parties may speak to costs if they are unable to agree, within 45 days of the date of this Decision. The Respondents named in the appeal will be the City of Calgary and the Calgary Assessment Review Board. Heard on the 2 nd day of December, 2015.

Dated at the City of Calgary, Alberta this 7 th day of July, 2016. Neil Wittmann C.J.C.Q.B.A. Appearances: Tyler Shandro for the Applicant Michael Janke for the Respondent, Composite Assessment Review Board Henry Chan for the Respondent, City of Calgary Appendix A Municipal Government Act , RSA 2000, c. M-26 293(1) In preparing an assessment, the assessor must, in a fair and equitable manner, (

a) apply the valuation and other standards set out in the regulations, and

(

b) follow the procedures set out in the regulations. 467(3) An assessment review board must not alter any assessment that is fair and equitable, taking into consideration (

a) the valuation and other standards set out in the regulations, 470(1) An appeal lies to the Court of Queen’s Bench on a question of law or jurisdiction with respect to a decision of an assessment review board. 470(2) Any of the following may appeal the decision of an assessment review board: (

a) the complainant; (

b) an assessed person, other than the complainant, who is affected by the decision; (

c) a municipality, if the decision being appealed relates to property that is within the boundaries of that municipality; (

d) the assessor for a municipality referred to in clause (c). 470(3) An application for permission to appeal must be filed with the Court of Queen’s Bench within 30 days after the persons notified of the hearing receive the decision under

section 469, and notice of the application for permission to appeal must be given to (

a) the assessment review board, and (

b) any other persons as the judge directs. 470(4) If an applicant makes a written request for materials to the assessment review board for the purposes of the application for permission to appeal under subsection (3), the assessment review board must provide the materials requested within 14 days from the date on which the written request is served. 470(5) On hearing the application and the representations of those persons who are, in the opinion of the judge, affected by the application, the judge may grant permission to appeal if the judge is of the opinion that the appeal involves a question of law or jurisdiction of sufficient importance to merit an appeal and has a reasonable chance of success. 470(6) If a judge grants permission to appeal, the judge may (

a) direct which persons or other bodies must be named as respondents to the appeal, (

b) specify the question of law or the question of jurisdiction to be appealed, and (

c) make any order as to the costs of the application that the judge considers appropriate. 470(7) On permission to appeal being granted by a judge, the appeal must proceed in accordance with the practice and procedure of the Court of Queen’s Bench. 470(8) Notice of the appeal must be given to the parties affected by the appeal and to the assessment review board. 470(9) Within 30 days from the date that the permission to appeal is obtained, the assessment review board must forward to the clerk of the Court of Queen’s Bench the transcript, if any, and the record of the hearing, its findings and reasons for the decision.

Matters Relating to Assessment and Taxation Regulation: AR 220/2004 Valuation standard for a parcel and improvements 6(1) When an assessor is preparing an assessment for a parcel of land and the improvements to it, the valuation standard for the land and improvements is market value unless subsection (2) or (3) applies.

(2) If the parcel of land is located in a city, town, village or summer village, is used for farming operations and has a farm building located on it, the valuation standard in section 4(1)(

b) applies to the land and the exemption in

section 22(

c) applies to the farm building.

(3) If the parcel of land is located in a county, municipal district, improvement district or special area, is used for farming operations and has a farm building located on it, the valuation standard in section 4(1)(

b) applies to the land and section 5(3) applies in respect of the farm building.

(4) If the improvement is railway, linear property or machinery and equipment, the valuation standard is as set out in

section 7, 8 or 9, as the case may be. The Excise Tax Act , RSC 1985, c. E-15 Imposition of goods and services tax 165

(1) Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 5% on the value of the consideration for the supply. Input Tax Credits – General rule for credits 169

(1) Subject to this Part, where a person acquires or imports property or a service or brings it into a participating province and, during a reporting period of the person during which the person is a registrant, tax in respect of the supply, importation or bringing in becomes payable by the person or is paid by the person without having become payable, the amount determined by the following formula is an input tax credit of the person in respect of the property or service for the period: A × B where A is the tax in respect of the supply, importation or bringing in, as the case may be, that becomes payable by the person during the reporting period or that is paid by the person during the period without having become payable; and B is (

a) where the tax is deemed under subsection 202(4) to have been paid in respect of the property on the last day of a taxation year of the person, the extent (expressed as a percentage of the total use of the property in the course of commercial activities and businesses of the person during that taxation year) to which the person used the property in the course of commercial activities of the person during that taxation year, (

b) where the property or service is acquired, imported or brought into the province, as the case may be, by the person for use in improving capital property of the person, the extent (expressed as a percentage) to which the person was using the capital property in the course of commercial activities of the person immediately after the capital property or a portion thereof was last acquired or imported by the person, and (

c) in any other case, the extent (expressed as a percentage) to which the person acquired or imported the property or service or brought it into the participating province, as the case may be, for consumption, use or supply in the course of commercial activities of the person. Collection of tax 221

(1) Every person who makes a taxable supply shall, as agent of Her Majesty in right of Canada, collect the tax under Division II payable by the recipient in respect of the supply. Exception

(2) A supplier (other than a prescribed supplier) who makes a taxable supply of real property by way of sale is not required to collect tax under Division II payable by the recipient in respect of the supply where … (

b) the recipient is registered under Subdivision d … Calculation of net tax – Self-assessment on acquisition of real property 228(4) Where tax under Division II is payable by a person in respect of a supply of real property and the supplier is not required to collect the tax and is not deemed to have collected the tax, (

a) where the person is a registrant and acquired the property for use or supply primarily in the course of commercial activities of the person, the person shall, on or before the day on or before which the person’s return for the reporting period in which the tax became payable is required to be filed, pay the tax to the Receiver General and report the tax in that return; … The Income Tax Act, RSC 1985, c.1 (5 th Supp.) Recaptured depreciation – Deemed capital cost of certain property 13(7.1) For the purposes of this Act, where

section 80 applied to reduce the capital cost to a taxpayer of a depreciable property or a taxpayer deducted an amount under subsection 127(5) or 127(6) in respect of a depreciable property or received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance … the capital cost of the property to the taxpayer at any particular time shall be deemed to be the amount, if any, by which the total of (

c) the capital cost of the property to the taxpayer, determined without reference to this subsection, subsection 13(7.4) and

section 80, … exceeds the total of … (

f) the amount of assistance the taxpayer has received or is entitled, before the particular time, to receive, and … in respect of that property before the disposition thereof by the taxpayer. Adjustments to cost base – Amounts to be deducted 53(1) In computing the adjusted cost base to a taxpayer of property at any time, there shall be deducted such of the following amounts in respect of the property as are applicable: … (

k) where the property was acquired by the taxpayer after 1971, the amount, if any, by which the total of (

i) the amount of any assistance which the taxpayer has received or is entitled to receive before that time from a government, municipality or other public authority, in respect of, or for the acquisition of, the property, whether as a grant, subsidy, forgivable loan, deduction from tax not otherwise provided for under this paragraph, investment allowance or as any other form of assistance other than… Goods and services tax — input tax credit and rebate 248(16) For the purposes of this Act, other than this subsection and subsection 6(8), an amount claimed by a taxpayer as an input tax credit or rebate with respect to the goods and services tax in respect of a property or service is deemed to be assistance from a government in respect of the property or service that is received by the taxpayer…