l11690-1(ar)
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Subject:
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Co-tenant registration
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This is further to your letter dated January 13, 1995 addressed to John Bain regarding the registration of co-tenant. We apologize for the delay in providing you with a response.
You have requested guidelines with regard to the application of the GST to co-tenancy for GST registration and accounting purposes.
You mention that in several situations groups of persons such as property developers, construction contractors, medical practitioners and others, jointly own properties under co-tenancy agreements and carry on commercial activities. In some instances they set up a numbered company as a bare trust to hold the property on behalf of the co-tenants and register the bare trust for GST purposes. In other instances, the co-tenancy is registered for the purpose of the GST.
You also mention that since a co-tenancy is not a person under the Excise Tax Act, each co-tenant is required to be registered for the purposes of the GST, subject to the small supplier's threshold, and must file separate GST returns. This, however, would create onerous accounting problems for the co-tenants, who will not only have to split their revenues periodically, but may also have to consolidate revenues from other co-tenancies which have different fiscal periods.
As you mention a co-tenancy is not a person under the GST and cannot register. As noted above, each co-tenant is required to register subject to the small supplier's threshold and would have to account for the tax accordingly. There is nothing in the legislation which would permit those persons to treat themselves as a single entity, subject to that entity being considered a partnership or some other form of group entity. In the case where a bare trust is formed, the same principle applies as a bare trust is not a person and cannot register (see policy statement P-015). If a joint venture is formed by the co-tenants, an election under section 273 can be filed if all the conditions therein are met.
In the case where there has been a mistake when registering the entity (when the co-tenancy or a bare trust has been treated as a person), action should be taken by the district office to remedy the situation by canceling the inappropriate registration.
There are no more specific guidelines or policy available at this time with regard to this matter. Should you have questions you can contact Gerry O'Reilley at (819) 952-9589, Serge Bernier at (819) 952-9580, François Paris at (819) 952-8812 or Anny Roy at (819) 954-2560.
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch
GAD#: 1073 Reg
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