CRA finds that the GST/HST self-supply rule for a MURC did not apply where it was used as a place of “lodging” rather than a place of residence

A farmer constructed a 600 square-feet bunkhouse (with 2 bedrooms, a kitchen and bathroom) to provide accommodation to two temporary foreign workers for each annual 10-week harvest period. CRA found that self-supply rule in s. 191(3) did not apply since the bunkhouse was first occupied as a place of lodging, rather than as a “place of residence” as required by s. 191(3)(b)(i). In this regard, CRA stated that the workers likely would regard their stay as a “transient” one and, due to the cramped accommodation, would not “view it as a place where a person is … intended to settle into or maintain an ordinary mode of living.”

Even though the units were places of lodging rather than places of residence, CRA nonetheless considered the bunkhouse to qualify as a residential complex and as a multiple unit residential complex.

The supplies to the workers of the accommodation would be exempted under Sched. V, Pt. V, s. 6. There also was relatively “minimal” use of the bunkhouse in commercial activities while the temporary workers were not there. Accordingly, having regard to the rule in s. 141(4) - that if substantially all (90% or more) of the intended consumption or use of property or service is for activities that are not commercial activities, then the consumption or use is deemed to be in those activities that are not commercial activities - it appeared likely that the farmer could not claim any input tax credits for the construction costs.

Neal Armstrong. Summaries of 22 March 2022 GST/HST Interpretation 238955 under ETA s. 191(3), s. 123(1) – residential complex and s. 141(4).