Dear XXXXX:
Further to our telephone conversation, the following information relates to the Goods and Services Tax (GST) treatment of the right to moor a boat in a marina.
Real property includes a right or interest in the property. Rentals of real property by a "public service body" (including municipalities and non-profit organizations) are generally exempt from the application of the GST unless a specific exclusion applies to make the rental taxable or the body elects to charge GST on the rental. For example, prior to September 15, 1992, all leases and licences of real property by public service bodies for a period of at least one month were exempt from GST unless the body elected otherwise. The legislation was amended, however, such that licences entered into after September 14, 1992, are subject to GST regardless of the length of the licence, while a lease continues to be exempt if made for a term of at least one month unless the body elects to charge GST.
As a result, a licence provided by a GST registered public service body of the right to moor a boat is subject to GST after September 14, 1992, and only exempt from GST for agreements entered into on or prior to that date if the period of the licence was for at least one month and the body did not elect to charge GST. Effectively, the treatment of such licences is the same for both registered commercial enterprises and registered public service bodies as of September 15, 1992. (A GST registrant includes any business that earns more than $30,000 annual revenues from taxable supplies or voluntarily elects to register.
Whether a particular rental is made by way of lease or licence is a question of fact and depends on a number of factors including the actual terms of the arrangement between the parties. A seasonal use of property in which the owner retains control and access to the whole of the premises is generally considered a supply made by way of licence. Accordingly a right to moor a boat in a marina would normally be considered a licence of real property which is taxable, except for agreements provided by public service bodies entered into before September 15, 1992, in which the period of the licence must be less than one month to be taxable (or for agreements of at least one month entered into before September 15, 1992, the body elected to charge GST).
For your reference, attached are copies of the applicable provisions of the legislation and explanatory notes relating to the change in exemption for the supply in question when made by a public service body. There is no exemption for a similar supply when made by a registered commercial enterprise.
I hope this information will be of assistance to you. Should you have any questions pertaining to this matter, please do not hesitate to contact me at (613) 954-3772.
S. Farber
Manager - Real Property
Tax Policy - Special
Sectors Policy and Legislation
Excise/GST
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