This is in response to your memorandum of April 28, 1995, in which you request clarification in applying the provisions of section 13 of Part I of Schedule V to the Excise Tax Act (the "Act"). We apologize for the delay in responding.
Statement of Facts
1. In the past few years, the XXXXX area has seen the development of many residential "adult communities". The marketing of residences situated in these developments are usually directed to professional or retired individuals who will occupy a home therein as a place of residence.
2. A typical development consists of a combination of single unit (detached) and double unit (sharing a common wall similar to a duplex) complexes. A development will usually include recreational facilities such as a club house and/or a swimming pool. Furthermore, ample parking is usually available for a resident's motor home or other recreational vehicle. Developments of this nature are usually walled and gated for security purposes.
3. Each unit in a development, including each individual unit in the double unit complexes, is described as a separate unit on a registered strata lot plan registered pursuant to XXXXX[.]
4. Strata fees are collected by a strata corporation operating under the authority of XXXXX. The fees collected are to cover the common expenses that are incurred by the strata corporation in maintaining of a development.
Interpretation Requested
Are the strata fees collected by a strata corporation from owners or lessees of units in respect of these developments exempt from GST pursuant to section 13 of Part I of Schedule V to the Act?
Interpretation Given
Section 13 of Part I of Schedule V to the Act exempts the following:
A supply made by a condominium corporation to the owner or lessee of a residential condominium unit in the condominium complex managed by the condominium corporation of property or a service relating to the occupancy or use of the unit.
It is important to establish whether the units in question are residential condominium units for GST purposes. Previously, the Department has viewed a single detached residential home registered on a condominium or strata lot plan (or similar plan or description registered under provincial law) not to be a residential condominium unit for GST purposes but rather simply a single detached home. This view was adopted in order to alleviate inequities involving the construction of such units by individuals who would otherwise qualify for the GST new housing rebate under section 256 of the Act. However, each unit, whether a single unit detached or as part of a double unit complex, will satisfy the definition of "residential condominium unit" for GST purposes as defined in subsection 123(1) of the Act. Although the Department views a single detached residential home registered on a strata lot plan to be a "residential condominium unit", for purposes of the GST new housing rebate under section 256 of the Act, such a unit shall still be considered, on an administrative basis, to be a single unit residential complex until legislative change to that section is forthcoming.
Of particular concern is the requirement under section 13 of Part I of Schedule V to the Act that the residential condominium unit be part of the "condominium complex" that is managed by the condominium or strata corporation. A "condominium complex" is defined for GST purposes under subsection 123(1) of the Act to mean, " ... a residential complex that contains more than one residential condominium unit."
A single detached residential condominium unit is not situated in a condominium complex and is therefore precluded from the exempting provision outlined under section 13 of Part I of Schedule V to the Act. Additionally, the use of the word "the" suggests a single, particular condominium complex. As a result, where a strata plan consists of many residential condominium units (e.g. single units and double units) that are not part of one single, particular condominium complex, the application of section 13 of Part I of Schedule V is problematic.
It would not be in keeping with the intention and scheme of the Act to have the strata fees payable by owners or lessees of the above described units taxable and precluded from the exempting provision. Accordingly, on an administrative basis, the Department will view the supplies of property or services made by the strata corporation to the owners or lessees of single unit and double unit complexes (that are residential condominium units) managed by the strata corporation as exempt for GST purposes pursuant to section 13 of Part I of Schedule V to the Act.
Finally, we note that this problem has been brought to the attention of the Department of Finance. We will keep you advised of any future changes. Should you have questions or require clarification of any of the above, please contact John Bain at (613) 954-8852.
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
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