1 October 1996 GST/HST Interpretation 11870-4-2[2] - GST Rebate to Owner-builder

Dear XXXXX

This is in response to XXXXX E-mail messages of March 6, 1996 and January 23, 1996 concerning the applicability of section 254 of the Excise Tax Act (the Act) to the case of a residential complex constructed by a builder / individual who has self-assessed under section 191 of the Act. XXXXX informed us that she was no longer responsible for this case, and that all correspondence should be addressed to you.

Our understanding of the facts is as follows:

Statement of Facts

1 An individual built and moved into a house, as a place of residence and did not self-assess, based on the fair market value of the residence.

2. More than two years later, the individual XXXXX was assessed, based on the fair market value of the residence at the time it was first occupied, under subparagraph 191(1)(a)(ii) of the Act.

Interpretation Requested

Is the builder / individual entitled to a GST New Housing Rebate under section 254 of the Act, which allows for filing the application four years from the date ownership was transferred to the individual?

The XXXXX who raised this issue, XXXXX, states that the individual meets all the requirements of section 256 of the Act, which allows a GST New Housing Rebate on owner-built homes, but the two-year deadline for filing an application has already passed at the time the individual was XXXXX assessed.

Interpretation Given

Based on the information provided, our interpretation is as follows:

Had he filed his application in time, the builder / individual would have been entitled to a GST New Housing Rebate under section 256 of the Act, which applies specifically to the case of owner-built homes. He is not entitled to a rebate under section 254 of the act. It is unfortunate that the two-year dealine for filing an application under section 256 has passed, but in this case, the Department cannot be held responsible for any errors made by the taxpayer.

The rebate under section 254 is intended for individuals who acquire a newly constructed home from a builder. It does not apply to the case at hand which does not meet the requirement under paragraph 254(2)(b) that "the particular individual becomes liable or assumes liability under an agreement of purchase and sale of the complex ... between the builder and the particular individual". The deemed sale (self-supply) under section 191 creates a liability on a builder to remit tax and it does not create an "agreement of purchase and sale" for purposes of the section 254 rebate.

Should you have any further questions or require clarification on the above, please do not hesitate to contact the undersigned at (613) 952-9587.

Yours truly,

Bao Tran
Policy Officer
Financial Institutions and Real Property
GST Rulings and Interpretations

ON OFFICE COPY

Legal References:                   ss 191, 254, 256 ETA

Authority:                              

Reference:                              

b.c.c.:   District Chief, Audit

b.c.c.:   hard copy - X/F GST - XXXXX