Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 124949
September 24, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Application of the HST transitional rules in British Columbia to real estate services
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to real estate services provided in British Columbia.
HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
XXXXX. You have concerns that there are no clear guidelines to help XXXXX determine the percentage of their services performed before July 1, 2010, and the percentage of services performed on or after July 1, 2010, for real estate transactions that straddle the implementation date, XXXXX. In these cases, you indicate that there are properties that have sold prior to July 1, 2010 but are not scheduled to close until the property is actually constructed which may be XXXXX years from now.
XXXXX. In addition, it is your view that the XXXXX.
XXXXX.
Interpretation Requested
You would like clarification as to which dates should be considered as the start and end dates for real estate services that straddle the July 1, 2010 implementation date. You propose that we make a ruling stating that, in all cases, the end date of real estate services provided by practitioners in respect of real property transactions is the firm sale date.
Interpretation Given
We are unable to provide a ruling as you have requested given that such rulings are issued in respect of a clearly defined fact situation of a particular taxpayer. However, we are able to provide the following interpretation. Reference may be made to GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service for information with respect to the issuance of GST/HST rulings.
The determination of when work is performed is a question of fact that must be determined on a case by case basis. It is the CRA's position that real estate practitioners should determine the portion of their services performed on or after July 1, 2010 on a case by case basis in a fair and reasonable manner. In many cases, a real estate service provided by a practitioner representing a vendor will start when the listing agreement is entered into with the vendor. In addition, we recognize that in many cases, the service provided by the practitioner will be substantially completed by the date that a binding purchase and sale agreement is entered into by the parties, that is the date the sale becomes unconditional. Where this is the case, these dates may be used to determine the extent of work performed before and on or after July 1, 2010. Therefore, in these cases, the CRA recognizes that these dates will form the basis for determining the percentage of work performed before July 1, 2010 and on or after July 1, 2010. However, in those circumstances where work is performed by a practitioner after the date a binding purchase and sale agreement is entered into, that is, between the date the sale becomes unconditional and the closing date, the practitioner will be required to take this work into consideration.
As you know, XXXXX must use the HST general transitional rules for services when they provide taxable supplies of real estate services in British Columbia that straddle the July 1, 2010 implementation date. You will find more information on the transitional rules for services and on how to account for the GST/HST charged on services in GST/HST Info Sheet GI-056, Ontario and British Columbia: Transition to the Harmonized Sales Tax - Services, on the CRA's Web site at: http://www.cra-arc.gc.ca/formspubs/typ/menu-eng.html.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9587. 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,
Béatrice Mulinda
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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