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: 81067
February 25, 2011
Dear [Client]:
Subject:
GST/HST RULING
Application of the GST/HST to services provided for a finders fee
This is in reply to your letter concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the rental of a site at the [...] [(Trailer Park)] and the pro-rated portion of the municipal taxes that [the Trailer Park] charges 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 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.
All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.
The following facts are based on your letter, your discussions with [...] of the [...] Tax Services Office, our telephone discussions and the Licence Agreement in respect of your site at [the Trailer Park].
Statement of Facts
1. [The Trailer Park] is located at [...], in the municipality of [...], Ontario. [The Trailer Park] has a total of [...] sites. For GST/HST purposes, [the Trailer Park] is not a residential trailer park as that term is defined in subsection 123(1).
2. The majority of the sites are for six months seasonal occupancy from May 1st through to Thanksgiving, as the water to these sites is turned off for the winter. The section of the park that generally allows for longer stays has a winterized water system.
3. Some occupants asked for mail delivery at the [Trailer Park] and the [...] Post office installed P.O. boxes at the entrance to the park.
4. Electrical, water and sewer facilities, and phone service are available to all sites.
5. Occupants of sites at the [Trailer Park] are required to sign an agreement of occupancy. A copy of the [...] (the "Licence Agreement") entered into between you and the operator of the [Trailer Park], dated [mm/dd/yyyy], for site Lot [...] has been provided to us for review.
6. Section [...] of the Licence Agreement provides that occupancy of the site at the [Trailer Park] shall be limited to [...].
7. Section [...] of the Licence Agreement provides [...].
8. Section [...] of the Licence Agreement states [...]. The Licence Agreement sets out this address as [...] Ontario, [...], which was your address at the [Trailer Park] up until [mm/dd/yyyy].
9. You resided on [...], Lot [...], at the [Trailer Park], under what you refer to as an "11-month stay" arrangement. [...] Your site at the [Trailer Park] was your permanent and only address until [mm/dd/yyyy]. You have provided a copy of your Ontario driver's licence which showed your address as [...], Ontario.
10. You purchased your unit, a [...] trailer, in [mm/yyyy]. The unit measures [...] feet x [...] feet. In [yyyy], you constructed an addition to the original unit measuring [...] feet x [...] feet, for a total square footage of about [...] square feet of living space. Both the trailer and addition were manufactured by [...].
11. The unit is supported on concrete blocks installed on a full concrete pad in a manner that is conducive to long-term residential use. The wheels and tongue, originally used for transporting the unit to the site, have been removed. The unit is permanently and directly connected year-round to service facilities including hydro, natural gas, underground winterized water pipes and septic. The unit cannot be readily disconnected from these services. The unit is equipped with central air, is fully skirted and includes a large raised deck that is partially covered by the roof that extends over the addition. In addition, the property is fully landscaped with exterior lighting on the unit, with a matching lamppost installed on the property, and includes a patio and garden shed. You have provided photos of your unit.
12. In [yyyy/yyyy], [...] you changed your address to the address of your site at the [Trailer Park], and gave up your home, which at the time was in [...], Ontario, to make your residence at the [Trailer Park] your primary and only place of residence.
13. From [yyyy] to [mm/dd/yyyy], you have been residing at the [Trailer Park], except generally for the period of January to March, during which time you go south [...] for the winter months.
14. You indicate that you paid an annual rent amount for the site at the [Trailer Park]. This amount was prorated and paid on a monthly basis, totalling approximately $[...] per month. In addition, [the Trailer Park] charged you a prorated amount as your share of the municipal taxes assessed in respect of your unit. Hydro to your unit was metered and invoiced to you by [the Trailer Park] every three months.
15. You sold your unit at the [Trailer Park] on [mm/dd/yyyy], and moved back to [...], Ontario. The unit remains on the site at the [Trailer Park].
Ruling Requested
You are requesting a ruling as to whether the rental of the site in the [Trailer Park] on which your unit is situated and the amount charged to you by [the Trailer Park] for municipal tax assessed in respect of your unit are subject to the GST/HST.
Ruling Given
Based on the facts set out above, we rule that the total amount charged for the rental of the land, including the additional amount charged to you by [the Trailer Park] for your share of the municipal taxes assessed in respect of your unit located on Lot [...] in the [Trailer Park] is consideration for a supply of the 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. Modifications have been made to the unit such that the unit has the same permanent residential characteristics as a house, 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. Except for the period of January to March during which time you go south for the winter, you resided full-time at the unit situated on the site at the [Trailer Park]. The fact that you were absent from the [Trailer Park] during the winter months does not preclude the unit from being considered your place of residence. In this case, the facts indicate that the unit situated on the site at the [Trailer Park] was your primary and only place of residence in Canada from [yyyy] until [mm/yyyy]. Where a residential unit is an individual's primary place of residence, the particular unit meets the requirement that the unit be for use and enjoyment as a place of residence for individuals. 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, the additional amounts charged by [the Trailer Park] for your share of the municipal taxes assessed in respect of your unit are 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). 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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