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XXXXX
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January 26, 1996
XXXXX
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Dear sir:
This concerns your facsimile message of January 17, 1996, to Mr. Don Dawson, concerning the construction of a university centre complex by XXXXX[.]
Facts
1. The University is constructing a student centre building on its main campus in XXXXX[.] The building is expected to cost XXXXX XXXXX and is now approximately XXXXX complete.
2. The building will house both academic and commercial units. The commercial area will consist of a bookstore, pub, restaurant, food court, multi-purpose hall, health clinic, retail space and parkade. Some of the space will be operated by the university, some of it will be operated by the student union, and some will be rented out to commercial organizations.
3. The University intends to make an election pursuant to section 211 of the Excise Tax Act, so that its supplies of real property by way of rental will be taxable. It estimates that, if it does so, the building will be used XXXXX in commercial activity.
4. On March 22, 1995, XXXXX sent a letter to the University, stating that a public sector body would normally determine the amount of input tax credits it could claim on the basis of primary usage. However, the letter also stated that if a public service body makes an election pursuant to section 211 of the ETA, it must change its method of allocation from primary usage to percentage of use.
The letter also stated that the University could claim partial rebates in respect of that portion of the GST on input for which it is not claiming input tax credits.
5. On November 29, 1995, you sent a letter to the University, discussing the University's intention of making an election pursuant to section 211 of the ETA, and stating that the expected primary usage of the building would determine whether the University could claim input tax credits.
6. On January 10, 1996, XXXXX, XXXXX advised that the University wished to make an election pursuant to section 211 of the ETA and claim partial input tax credits, based on the percentage of the building that was used in commercial activities.
Question
If a university has filed an election pursuant to section 211 of the ETA, is its entitlement to claim input tax credits dependent on the primary usage of the building, or should it allocate its inputs according to percentage of use?
Response
If a public service body makes an election pursuant to section 211 of the ETA, it should calculate input tax credits on the basis of what percentage of the property is used in commercial activities. The public service body may claim a partial rebate, pursuant to section 259 of the ETA, in respect of that percentage of the GST on inputs that has not been claimed as input tax credits. Therefore, provided that the information given by the University is accurate, the approach to input tax credits and rebates that it wishes to take, as outlined in the letter of January 10, 1996, from XXXXX, would appear to be correct. You may therefore wish to amend your letter of November 25, 1995.
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 #11915-7-4
Ref. s. 8/Pt. III/Sch. V
Document #1003
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