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Subject:
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Definition of "Residential Complex" and Sale of Leased Land
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This is in response to your memorandum of June 22, 1995, along with subsequent submissions, in which you ask our assistance in determining whether a building is a "residential complex" for GST purposes as defined in subsection 123(1) of the Excise Tax Act (the "Act"). We apologize for the delay in responding.
Statement of Facts
1. An individual began leasing a XXXXX acre parcel of land located in XXXXX on June 30, 1994.
2. The land is leased from the XXXXX (the "Ministry") which considers the land to be recreational property. The lease is exempt from GST. It is assumed that the lease of the land is exempt by virtue of paragraph 7(a) of Part I of Schedule V to the Act.
3. The individual has constructed a one room building (that could be characterized as a cabin) on the land which is used by the individual and other family members for recreational purposes.
4. The building does not have any plumbing, heating or electrical systems. The building can be "locked up" by the individual; that is the windows and a door have locking mechanisms. The building is insulated and the walls and ceiling are finished.
5. The construction of the building was completed in XXXXX August of 1994 and first occupied that same month.
Interpretation Requested
Is the building and the land considered to be a "residential complex" as defined for GST purposes under subsection 123(1) of the Act?
Interpretation Given
Upon reviewing all submitted information, it is our view that the building and the land is considered to be a "residential complex" for GST purposes as defined under subsection 123(1) of the Act. The building satisfies the definition of "residential unit" found under that same subsection and the land is reasonably necessary for the use and enjoyment of the building as a place of residence for individuals.
Should have questions or comments on any of the above, please do not hesitate to contact John Bain at (613) 954-8852.
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
File #11950-1
Ref. Doc. #1411
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