Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 142744
Business Number: […]
July 6, 2012
Dear [Client]:
Subject: GST/HST RULING
Seniors’ housing project - […]
Thank you for your fax of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the construction of a new seniors’ housing project by your client, […].
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand
1. […], hereafter referred to as “the Society”, is a charity under the Excise Tax Act (ETA) and registered for GST/HST purposes under BN [#].
2. In [yyyy], the Society demolished an outdated housing project on property then owned by […] (hereafter referred to as “the Original Owner”) bearing the civic address of British Columbia (“the Original Parcel”), in order to build a larger, [#]-unit rental complex on the site. The ultimate goal was for the Society to own and operate the new complex.
3. The Original Parcel was subdivided in [yyyy] into two parcels, the first being approximately […] in size and bearing the legal description […] (“Lot A”), and the second being approximately […] in size and bearing the legal description […] (“Lot B”). Lot B was considered surplus to the needs of the new complex, and was sold by the Original Owner to a third party.
4. The […]-storey residential structure constructed by the Society on Lot A consists of [#] self-contained residential units with limited cooking facilities, a large dining area, recreation rooms, and a parking level with storage facilities. It is hereafter referred to as “the Complex”.
5. The Society commenced construction of the Complex [mm/dd/yyyy]. […] opening was in [mm/yyyy].
6. On [mm/dd/yyyy], the Society and the Original Owner entered into an agreement (“the Agreement”) with […] (“the Organization”), whereby the Organization would provide funding and mortgage financing to assist with the construction of the Complex. A copy of the Agreement was provided for our review.
7. […] the Organization required that the Society sell [#] of the [#] units in the completed Complex to the Provincial Rental Housing Corporation […] (“the Corporation”), […]
8. The Agreement specifies that the sale of these [#] units will be made under a contract of purchase and sale at a cost not to exceed [$].
9. To facilitate the sale, and in accordance with the terms of the Agreement and the provisions of the Strata Property Act of BC, the Complex was ultimately subdivided into two strata lots under Strata Lot Plan # […]. Further, in accordance with the requirements of the Strata Property Act, a strata corporation was established at that time to manage and maintain the common property and common assets of the strata corporation for the benefit of the owners of the two strata lots. The portions of the Complex identified as common property in this case included the hallways, dining, recreation and parking areas, and the subjacent land.
10. Resulting […] (“Lot 1”) is comprised of [#] of the residential units in the Complex. Per the Strata Property Act, the owner of Lot 1 also owns the common property and common assets of the strata corporation as a tenant in common in a share equal to the unit entitlement of the owner's strata lot divided by the total unit entitlement of all the strata lots.
11. Resulting […] (“Lot 2”) is comprised of the remaining [#] residential units in the Complex. The owner of Lot 2 also owns the common property and common assets of the strata corporation as a tenant in common in a share equal to the unit entitlement of the owner's strata lot divided by the total unit entitlement of all the strata lots.
12. Neither Lot 1 nor Lot 2 has been further subdivided.
13. The Society has provided the CRA with written third party authorization in respect of this ruling request.
RULING REQUESTED
You have asked us confirm that notwithstanding the fact that the Complex has been subdivided into two strata lots, the Complex constitutes a multiple unit residential complex under the ETA.
RULING GIVEN
Based on the facts set out above, we rule that the Complex constitutes a multiple unit residential complex under the ETA.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
The Complex consists of [#] “residential units” as that term is defined in subsection 123(1).
Typically, a person that chooses to subdivide a building under the Strata Property Act will register each individual “unit” (whether a residential unit or a commercial unit) within the building as a separate strata lot within the strata lot plan. Each residential unit that forms part of that building and that is registered as a separate strata lot under the Strata Property Act would constitute a “residential condominium unit” as that term is defined in subsection 123(1). Further, a building or that part of a building that is a residential complex and that contains more than one residential condominium unit is a “condominium complex” as defined in that subsection.
In the case at hand, however, the Complex was subdivided into only two strata lots, each of which contained more than one residential unit. None of the [#] residential units in the Complex has been registered as a separate strata lot under the Strata Property Act.
As such, none of the residential units within the Complex constitute a residential condominium unit and the Complex does not constitute a condominium complex for GST/HST purposes. Rather, the Complex is a “multiple unit residential complex” as that term is defined in subsection 123(1). As that term excludes a condominium complex, it follows that provisions of the ETA that pertain to the construction or supply of a multiple-unit residential complex apply to the Complex, while any provisions that pertain specifically to a residential condominium unit or a condominium complex do not apply.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (604) 658-8548. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Lynn Birnie
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
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