Words and Phrases - "repay"

A builder constructs a new residential condominium complex containing 300 units. Although most are sold, it rents 10 units to individuals pursuant to 1-year leases on January 1, 2021, resulting in a s. 191(3) self-supply. However, on January 15, 2021, it sells the units (with the closing on February 15, 2021) so that the third-party purchaser becomes the landlord. The builder does not claim the new residential rental property (“NRRP”) Rebate respecting any of the 10 rental units in its January 2021 return (as such rebate would be required to be immediately repaid under s. 256.2(10) as the units’ purchaser did not acquire for personal use).

On a literal reading of s. 256.2(10), the builder is required to pay an amount equal to the NRRP Rebates to which it would have been entitled had it not sold the 10 units (even though in fact it never claimed or received the rebates) given that the operative phrase in s. 256.2(10) is “entitled to claim” the NRRP Rebates. However, CRA inferred from, inter alia, the reference in the Explanatory Notes to s. 256.2(10) establishing a requirement to “repay” the rebate (s. 256.2(10) itself instead uses the word “pay”) that the requirement to “repay” the rebates only arose when the rebates had actually been received, so that there was an amount to pay back. for each of the 10 rental units. Will CRA nonetheless only invoke s. 256.2(10) if the builder actually claims the NRRP Rebate, rather than assessing the builder in the amounts of the NRRP Rebates even if the builder never makes the NRRP Rebate claim?

CRA referred to the Explanatory Notes, which stated:

Subsection 256.2(10) requires a person who was eligible for the New Residential Rental Property Rebate to repay the amount of the rebate plus interest calculated on the amount for the period from the day the rebate was paid or applied to a liability of a person and ending on the day the person repays the amount. [emphasis added]

CRA then stated:

In the explanatory notes, the term “repay”, which the Merriam-Webster dictionary defines as “to pay back” or “make a return payment to”, would lead us to conclude that 256.2(10) would only apply to a situation where a rebate was paid to a claimant. Otherwise, there would not be an amount to pay back. Furthermore, the notes explain that the interest would be calculated based on the time period beginning on “the day the rebate was paid or applied to a liability of a person”. If a rebate was never requested, there would not be a rebate amount paid or applied to a liability of a person.

In conclusion, subsection 256.2(10) would only apply if the person claimed a New Residential Rental Property Rebate and within the first year, no longer qualified for that rebate.