CRA effectively indicates that a construction manager for an apartment building JV cannot be the JV operator for GST/HST purposes
Where a person is the operator of a joint venture for the construction of a multiple-unit residential complex by virtue of having managerial or operational control of the JV and does not have an interest in the real property on which the MURC is situated, CRA indicated that such operator cannot account for the GST/HST tax on the deemed self-supply under ETA s. 191(3) (on substantial completion and first tenant occupancy), and claim the new rental housing (s. 256.2(3)) rebate. Its reasoning:
Based on the … the operator … not hav[ing] an interest in the real property on which the MURC is situated, the operator does not meet the conditions set out in paragraph (a) of the definition of “builder.” The CRA will not administratively accept that a person is a builder of a MURC for GST/HST purposes where the person does not meet the conditions set out in the definition of “builder.”
This effectively indicates that a purported appointment of a construction manager (with no real estate ownership interest) as the operator of a JV for the construction of an apartment building or other MURC is illusory. It would appear that, in CRA's eyes, the manager would not be able to claim input tax credits for the costs incurred by it in the construction process, as the ensuing taxable supply under s. 191(3) that would otherwise enable such ITC claims would not, in CRA’s eyes, be deemed to be made by it.
Neal Armstrong. Summary of 27 February 2020 CBA Roundtable, Q.8 under ETA s. 273(1).