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: 81229
August 29, 2011
Dear [Client]:
Subject:
GST/HST RULING
GST/HST treatment of trailer park site rental
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 Park) and the pro-rated portion of the municipal taxes that [...] (the Corporation) 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 the information provided in your letter and in the recent telephone discussion with [...] on June 1, 2011.
Statement of Facts
1. The Park is located at [...] in [...] [Community 1], in the municipality of [...], [...] [Participating Province X]. It has a total of [...] sites. For GST/HST purposes, the Park is not a residential trailer park as that term is defined in subsection 123(1).
2. The Park is open seasonally for a period of six to nine months. The majority of the sites are for six months seasonal occupancy from May 1st through to Thanksgiving. 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. Electrical, water and sewer or septic facilities, and phone service are available to all sites. In addition, cable TV is available or individuals may put up their own satellite dish. Some occupants asked for mail delivery at the Park and the [...] Post office installed post office boxes at the entrance to the Park.
4. You indicate you first began leasing a site, Lot #[...], in that section of the Park that permits longer term stays in [yyyy] under an annual lease arrangement. At that time, you leased the site under what you referred to as an "11-month stay arrangement". You resided at the Park permanently throughout the year except for the month of February when the Park closed.
5. Since about [yyyy], the Corporation has restricted occupancy of the Park to a maximum of nine months from April to December. You state that you occupy your unit at the Park from April to December as your only and permanent place of residence in Canada. Your mailing address is the post office box at the Park and you have a telephone listing at the Park.
6. You own your unit, a [...] park model, which measures [...]' x [...]'. An add-a-room measuring [...]' x [...]' has been added to the original trailer. The unit is insulated for year-round use and is connected year-round in a permanent manner to service facilities, including hydro, natural gas and an underground, winterized water and septic system. The unit consists of one bedroom, living room, bathroom and kitchen facilities and a winterized addition. The unit is fully insured as your permanent residence.
7. The unit was towed to the site and is installed on a concrete pad. The tongue, originally used for transporting the unit to the site, has been removed and the unit is affixed in a permanent manner to the site. You have provided a photo of the unit. The unit has skirting around the entire structure and has a [...]' x [...]' deck. The site is fully landscaped and has a [...]' x [...]' concrete driveway. The unit has been affixed to the site since you purchased the unit. It is your intent that the unit remain affixed to site and continue to be your place of residence for the foreseeable future.
8. You indicate that you pay annual rent for the site as well as an additional amount in respect of your share of the municipal taxes assessed in respect of your unit.
Ruling Requested
You are requesting a ruling as to whether the rental of the site on which your unit is situated and the amount charged to you by the Corporation for municipal taxes 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 Corporation for your share of the municipal taxes assessed in respect of your unit located on Lot #[...] in the 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, natural 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 winter months when the Park is closed, you reside full-time in the unit at the Park. The fact that you are absent from the 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 has been your primary place of residence in Canada since approximately [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 amount charged to you by the Corporation 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). 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. Given the circumstances in this case, June 22, 2006 (the date we received your ruling request) will serve as the date for purposes of the two-year time limitation under section 261.
Please complete the attached rebate application and send a copy of this ruling, along with the completed rebate application and all of the original invoices issued to you by the Corporation in respect of your rental of Lot #[...], that are dated from [mm/dd/yyyy] to date, in which GST/HST was charged and that you paid, to the following address:
Summerside Tax Centre
Attention: [...]
Rebates Division
275 Pope Side Road
Summerside, PE C1N 5Z7
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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