GST/HST Rulings and Interpretations Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
XXXXX Case: HQR0000776
XXXXX Business Number: XXXXX
NCS: 11950-1, 11925-5
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Attention: XXXXX XXXXX
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August 25, 1997
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Subject:
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GST/HST APPLICATION RULING
Building Rentals
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Dear XXXXX
Thank you for your letter of June 23, 1997 to Ms. Andrée Nadeau concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to non-residential rent received by the XXXXX
Our understanding of the facts from your letter and as per your telephone conversation with Mr. John Bain on July 28, 1997, is as follows:
Statement of Facts
XXXXX is a registered charity, for the purposes of the Income Tax Act XXXXX
XXXXX
XXXXX operates and owns the building XXXXX
XXXXX leases a portion of the building for non-residential purposes to a number of businesses and organizations.
5. Terms of leases are for more than one month.
XXXXX has not filed an election under section 211 of the Excise Tax Act ("ETA").
XXXXX
Ruling Requested
Are XXXXX supplies of real property by way of lease to businesses and organizations subject to the GST?
Ruling Given
Based on the facts set out above, we rule that XXXXX above supplies of non-residential leases to businesses and organizations are exempt from the GST.
This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the ETA, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.
Explanation
It has been determined that XXXXX is a "charity" for GST/HST purposes as defined in subsection 123(1) of the ETA. Prior to January 1, 1997, a charity was included in the definition "public sector bodies" for purposes of the exemptions set out under Schedule V, Part VI of the ETA. After December 1996, the exemptions for charities are included in Schedule V, Part V.1 of the ETA.
Pursuant to subsection 136(1) of the ETA, a supply by way of lease, license or similar arrangement of the right to use real property is considered to be a supply of real property. Therefore the lease of the office space by the charity will be considered to be a supply of real property.
Most supplies of property and services made by charities are exempt from the GST pursuant to the exemptions set out under Schedule V, Part V.1 of the ETA. XXXXX above supplies of real property by way of lease are exempt from the GST pursuant to section 1 of Part V.1 of Schedule V of the ETA. As a result, XXXXX is not required to collect and remit any GST on these supplies, but will be eligible for a 50% rebate of GST paid on purchases related to the lease of the real property provided they meet all the requirements under section 259 of the ETA.
In respect of this property, XXXXX may elect under section 211 of the ETA to treat supplies of real property as taxable supplies. Please contact us if you require any further information on this election.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8221.
Yours truly,
Wendy Amos
ARulings Officer
Financial Institutions and Real Property Division Unit
GST/HST Rulings and Interpretations Directorate
Legislative References: ETA ss. 123(1) charity, ss. 136(1), s. 211, sch. V/V.1
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Originator's Desk Copy
NCS Subject Code(s): 1, 11925-5
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