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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 122697
April 4, 2011
Dear [Client]:
Subject:
GST/HST RULING
Annual lease of trailer park site
Thank you for your letter of March 20, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the rental of a site at the [...], (the "Resort) located on [...] Lake in [...] [City 1, Province X], and the pro-rated portion of municipal taxes charged to you with respect to the site rental. We apologize for the delay in responding.
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.
Based on the information provided in your letter and supporting documentation, as well as previous telephone discussions, including most recently with [...] on January 10, 2011, we understand the following:
Statement of Facts
1. You first began leasing a site at the Resort in approximately [yyyy]. You have been leasing the site on a one-year term, renewable annually.
2. In [yyyy], you purchased a new [...] trailer. The unit measures [...]' by [...]'. It is manufactured by [...], and you confirmed that the unit is CSA approved.
3. The unit is not a camping trailer. It is a manufactured unit which was delivered and installed on the site by the manufacturer, using specialized equipment for its transport.
4. You have constructed a [...]' x [...]' Florida room addition to the original unit. Both the original unit and addition have a shingled roof with eavestroughing and downspouts.
5. The unit is designed for year-round habitation and consists of 2 bedrooms, living room, and kitchen. The unit has a forced-air heating system as well as air conditioning. It is permanently and directly connected to utilities, including hydro, underground water and sewage system. It cannot be readily disconnected from these services.
6. You also have a satellite television connection at the site. You indicate that you do not have a phone listing at the site because the service is not available. You indicate that while mail delivery is available at the main entrance to the Resort, you have maintained the address of your primary residence in [...] [City 2] as your mailing address.
7. The unit is supported on concrete blocks for permanent stability and affixed on concrete pads in a manner that is conducive to long-term residential use. The tongue which was originally used for transporting the unit to the site has been removed. The unit is fully skirted and includes a deck/porch which is covered by the extension of the main roof. The site is fully landscaped, including landscaping around the perimeter of the structure. You have provided photos of your unit.
8. Your unit is situated on site #[...]. The Resort is a seasonal waterfront resort which is generally open from the beginning of May to Thanksgiving Day weekend.
9. You indicate that you reside in your unit at the Resort during the spring, summer and fall period. During this period you return to your primary place of residence in [City 2] from time to time only to pick up any mail and check on your home and belongings. During this period, you estimate that you spend 95% of the time at the Resort. You indicate that you have been using the site at the Resort as your permanent spring, summer and fall residence since you purchased the unit in [yyyy]. The unit is fully furnished by you and it has remained on the site year-round since the time of purchase in [yyyy].
10. During the winter period, you indicate that you continue to have access to the unit, but that the water and hydro are shut off.
11. You have provided a copy of the [...] License of Occupation (the "Agreement") dated [mm/dd/yyyy]. The Agreement provides that the use of the specified site shall be for recreational and/or vacation purposes only. During the term of the Agreement, you are required to maintain comprehensive general liability insurance in an amount not less than $1,000,000 as well as "all perils" insurance coverage.
12. In addition to the annual site fee, you are charged a pro-rata share of the annual property taxes or assessment charge by the Resort in respect of your particular site.
13. You indicate that your case is identical to that of your relative, [...] [your relative], who is also resident at the Resort during the spring, summer and fall period. You have provided a copy of the ruling that was provided to [your relative] by the Canada Revenue Agency (CRA) on [mm/dd/yyyy], which states that the supply of the site fee and property tax charges in respect of the site occupied by [your relative] at the Resort are exempt of the GST/HST.
Ruling Requested
You would like to know whether the site rental and assessment surcharge invoiced to you by the Resort under the Agreement for your share of the municipal taxes assessed in respect of your unit are subject to GST/HST.
Ruling Given
Based on the facts set out above, we rule that the amount charged for the rental of the land, including the additional amount charged to you for your share of the municipal taxes assessed in respect of your unit located at site #[...] at the Resort, is consideration for a supply of land that is exempt of the GST/HST under subparagraph 7(a)(i) of Part I of Schedule V to 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
Subparagraph 7(a)(i) of Part I of Schedule V to the ETA provides that a supply of land (other than a site in a residential trailer park) made by way of lease, licence or similar arrangement that provides for continuous possession or use of the land for at least one month is exempt if the supply is made to an owner, lessee or person in occupation or possession of a residential unit that is or is to be affixed to the land for the purpose of its use and enjoyment as a place of residence for individuals.
Subsection 123(1) defines the term "residential unit" to include a house, semi-detached house, mobile home or "any other similar premises". Whether a particular unit has the same permanent residential characteristics as a house such that it is considered to be a "residential unit", is affixed to the land, and is used as a place of residence for individuals is determined on a case-by-case basis taking into consideration the facts and circumstances of the particular case.
Based on the facts referred to above, the unit is considered to be a residential unit. It has the necessary residential characteristics, including permanency, as a house. It is installed in a permanent manner that is conducive to long-term residential use and is connected in a permanent way to hydro, gas, water and septic facilities. As such, the unit is considered to be a residential unit that is affixed to the land.
Whether a particular unit is used as a place of residence is a question of fact. That determination is made on a case-by-case basis. A residential unit that is affixed to the land may be considered to be a place of residence based on the purpose for which it was affixed to the land, as well as the length of the stay during which the unit is occupied as a place of residence during the year; that is, the length of time and the frequency throughout the year that the individual occupying the unit is physically present and using the unit as a place of residence.
The meaning attributed to a "place of residence", as opposed to "lodging", is based on a determination of the purpose of the stay, the amount of time of the stay, and the physical presence of the individual(s) occupying the unit. If a unit is the individual's primary place of residence, it will be considered to be for use and enjoyment of the individual as a place of residence. While an individual has only one primary place of residence, it is possible for an individual to have more than one place of residence. To be considered an individual's place of residence, the unit should be used for purposes of habitation or dwelling, but would not normally include an abode of a transient nature.
In this case, the facts indicate that you have been using the unit as your place of residence throughout the period the Resort is in operation, annually from May to Thanksgiving Day weekend. As such, all of the requirements of subparagraph 7(a)(i) of Part I of Schedule V to the ETA are met.
Additional Rent - property taxes
Property taxes paid by a property owner to the municipality are generally not subject to GST/HST. The property owner generally includes an amount that represents a recovery of such taxes from the lessee either as part of the basic rent or as an additional rent. Where a separate amount is paid by a lessee on account of property taxes assessed against the property owner, this amount is part of the consideration for the rental of the property, even if the lessee pays the amount directly to the municipality. As such, the amount will take on the same tax status as the rent. In this case, since the rental of the land on which the residential unit is situated is exempt of GST/HST, any additional amount charged to you for your share of the municipal taxes assessed in respect of your unit is not subject to GST/HST.
Tax paid in error
Under the ETA, where a person has paid an amount as or on account of tax that was not payable, the person may request a refund or credit of the amount from the supplier. A supplier may refund or credit the tax within two years after the day the amount was charged or collected. Further information on the time limitations and conditions for claiming refunds and credits is available in GST/HST Memoranda Series Chapter 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act, available on the CRA Web site.
Where a refund or credit is not issued by the supplier, the person may make an application under subsection 261(1) for a rebate of the tax paid in error by completing and submitting application form GST 189, General Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST), a copy of which is enclosed. It should be noted that a rebate application made under section 261 cannot include amounts that were paid in error more than two years before the application is filed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9212. 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,
Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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