Dear XXXXX:
This is in response to your E-mail message of February 8, 1996, to Mr. John Bain, concerning the GST status of mini-homes set on blocks.
Facts
1. Dealers supply individuals with new mini-homes that have wooden beam frames, and the individuals install the mini-homes in mobile/mini home parks. The individuals pay a monthly fee to the operators of the parks for the rental of the land on which the mini-homes are fixed.
2. Most such mini-homes are placed on a base consisting of concrete or wooden blocks set on reinforced steel patio blocks that are XXXXX, and which are placed on a gravel base. The mini-home is anchored in XXXXX places on each side of the home by tie down straps attached to augers placed in the ground. The tie down straps are installed around the mini-home, under the siding, at the time of manufacture.
3. Some mini-homes are set on concrete cylinders rather than on blocks. The tie down straps are anchored into the ground by augers, as in the first method.
Question
Can the mini-homes be considered to be residential complexes, so that the purchasers are eligible for new housing rebates?
Answer
Policy paper P-104 entitled "Meaning of "Mobile Home", "Residential Unit" and "Residential Complex" in the Context of Mini-homes, Park Model Trailers, Travel Trailers and Motor Homes" states that mini-homes may be considered to be residential complexes only if they are used as residential complexes and are affixed to the land in the same manner as a house. The paper states that relevant factors may include the type of structure, the use of the structure and the related land, the actual degree of permanency with which the structure is attached to the land, and applicable agreements relating to the permanency with which the structure is attached to the land. The policy paper refers to the fact that houses are generally set on permanent foundations, and states that the question of whether or not a particular structure is permanently affixed to the land in the same manner as a house is a question of fact. If the individual owner of a mini-home does permanently affix it to the land, he or she could qualify for a rebate for an owner-built house, pursuant to section 256 of the Excise Tax Act (the ETA).
However, it is our view that mini-homes that rest on blocks or concrete cylinders, and that are strapped to augers anchored into the ground, are not permanently affixed to the ground, since they are not permanently attached to a foundation. They could be made movable by simply unfastening the straps, whereas a house that is permanently affixed to a foundation could only be made movable by breaking the concrete or other material that affixes it to its foundation. Also, it would appear that the residents of such mini-homes generally rent the sites on a monthly basis, rather than on a long-term basis. Therefore, such mini-homes do not fit into the current definition of "residential complex" in subsection 123(1) of the ETA as it reads without the proposed amendments to the ETA that were tabled on April 23, 1996. As a result, if individuals purchased mini-homes prior to April 24, 1996, and consideration did not become due after that date and was not paid after that date without becoming due, the individuals are generally not eligible for new housing rebates if they set their mini-homes on blocks or concrete cylinders, as they do not satisfy the requirements of section 254 or 256 of the ETA.
As you know, mini-homes that are subject to the proposed legislative amendment announced on April 23, 1996, should be considered to be residential complexes, because the proposed revised definition of "mobile home" will now include a mini-home. The proposed revised definition reads as follows:
"a building, the manufacture and assembly of which is completed or substantially completed, that is equipped with complete plumbing, electrical and heating facilities and that is designed to be moved to a site for installation on a foundation and connection to service facilities and to be occupied as a place of residence, but does not include any travel trailer, motor home, camping trailer or other vehicle or trailer designed for recreational use".
This definition, which would include mini-homes, comes into affect on April 24, 1996, except where the supply is made before April 24, 1996, but consideration becomes due on or after that day or is paid on or after that date without having become due. Since the current definition of "residential complex" includes mobile homes, mini-homes will be brought into the definition of "residential complex" indirectly. Therefore, if individuals purchased mini-homes on or after April 24, 1996, or if they purchased mini-homes before that date but consideration became due on or after that date or was paid on or after that date without having become due, and the individuals were not eligible for a rebate pursuant to subsection 256(2) of the ETA, they may be eligible for new housing rebates pursuant to section 254 or subsection 256(2.1) of the ETA.
If you require any further information concerning this matter, please contact Mr. Don Dawson at (613) 952-9211.
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
File #11950-1
Ref. 8.1/I/V
Document #1644
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