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: 127330r
June 29, 2011
Dear [Client]:
Subject:
GST/HST RULING
[...] [Tax Status of Condominium Units]
Thank you for your letter of March 2, 2011 requesting a review of GST/HST Ruling case [...] issued to you on [mm/dd/yyyy] by the [...] Region GST/HST Rulings Centre.
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 as follows:
1. [...] (the Purchaser) entered into an agreement of purchase and sale (the Agreement) on [mm/dd/yyyy] with [...] (the Vendor) to purchase a condominium unit as well as [...] parking spaces in a condominium complex located at [...] [City 1, Participating Province X]. The Agreement included the following provisions:
(a) Section [...] lists the Property (i.e., the condominium unit and parking spaces to be supplied) as [...].
(b) Section [...] lists the type of condominium unit to be supplied as [...]. Floor plans for [...] and [...] were provided as a schedule to the Agreement and were included with your submission.
(c) The total purchase price, including applicable GST, is listed at $[...].
(d) The interim occupancy date for the condominium unit and parking spaces is listed as [mm/dd/yyyy].
2. On [mm/dd/yyyy] the Purchaser and the Vendor entered into [...] (the Amendment) which included the following provisions:
(a) The condominium unit and parking spaces listed in the Agreement were deleted and the following were inserted: [...] (collectively, the Units).
(b) The condominium unit type [...] in section [...] of the Agreement was deleted and [...] was inserted. Your submission did not contain floor plans for either [...].
(c) There is an increase in the purchase price, including applicable GST, to $[...].
(d) The interim occupancy date in the Agreement was deleted and was replaced with the interim occupancy date of [mm/dd/yyyy]. (iFootnote 1) We understand that this date was subsequently changed to [mm/dd/yyyy].
(e) Schedule [...] to the Agreement, titled [...], was deleted and Schedule [...] to the Amendment was added. (iiFootnote 2)
3. Ownership and possession of the Units identified in the Amendment did not transfer to the Purchaser prior to July 1, 2010.
Ruling Requested
You would like to know if the purchase of the condominium unit by the Purchaser from the Vendor pursuant to the Agreement and the Amendment is subject to the GST or HST.
Ruling Given
Based on the facts set out above, we confirm that the purchase of the Units by the Purchaser from the Vendor is subject to the HST at [...]%.
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
We have carefully reviewed your letter of March 2, 2011 in which you expressed your concerns with our ruling of [mm/dd/yyyy]. We agree with the remarks set out in your letter that it does not appear that novation occurred in this situation. However, it is our position that because the Amendment changes the real property being supplied by the Vendor and the amount of consideration payable therefore, the grandparenting rules (discussed below) for purchase and sale agreements entered into on or before June 18, 2009, do not apply. We consider the Amendment that was entered into on [mm/dd/yyyy] to be a new agreement, and given that ownership and possession of the Units did not transfer under that agreement before July 1, 2010, the HST at [...]% applies to the sale of the Units.
Grandparenting rules
HST generally applies to the sale of a newly constructed residential condominium unit where both ownership and possession of the unit are transferred to the purchaser after June 2010.
Where a written agreement of purchase and sale for a newly constructed residential condominium unit is entered into on or before June 18, 2009, the sale is generally grandparented if both ownership and possession of the unit transfer to the purchaser, under the agreement, after June 2010. We consider the agreement of purchase and sale in this case to have been entered into on [mm/dd/yyyy] and as such, cannot be grandparented under these rules.
We thank you for bringing your concerns with policy statement P-249, Agreements and Novation, to our attention.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9248 or Hugh Dorward, A/[Manager] of the Real Property Unit at 613-954-8852. If 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,
Ivan Bastasic
Director
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
i 1 We assume that there was a change to this date in the Agreement because it lists the interim occupancy date as [mm/dd/yyyy] rather than [mm/dd/yyyy] as is stated in the Amendment.
ii 2 Schedule [...] to the Amendment was not included in your submission.
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UNCLASSIFIED
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