4 December 1998 GST/HST Interpretation HQR0001254 - Supplies Made by Strata Corporations

Dear XXXXX

Thank you for your letter of June 10, 1998 concerning the application of the Goods and Services Tax (GST)Harmonized Sales Tax (HST) to your operations. All references herein are to the Excise Tax Act (ETA), unless otherwise stated.

Issue 1:

Interpretation Requested

XXXXX provides for the registration of "bare land strata plans". These are a type of strata plan in which the lot boundaries are defined by reference to land survey markers and not by reference to walls and ceilings of a building. However, subsection 123(1) of the (ETA), restricts the definition of a "residential condominium unit" (RCU) to, "... a bounded space in a building designated or described as a separate unit on a registered condominium or strata lot plan ...".

Section 13 of Part I of Schedule V to the ETA exempts from taxation, "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."

You have asked whether or not supplies made by a strata corporation in a bare land strata development would be exempt under section 13 or not. In particular, you are concerned that the exemption is available only with respect to residential condominium units, and that the definition of a residential condominium unit may not encompass a property that is not a bounded space in a building, such as a bare land strata lot.

Interpretation Provided

It is our view that supplies of property or services made by a strata corporation to the owner or lesse of a bare land strata lot will be taxable and will not fall within the exemptions contained in section 13 of Part I of Schedule V to the ETA.

The defining characteristic of a bare land strata lot plan is that it describes or identifies land, rather than buildings, as the titled property. By contrast, the defining characteristic of an RCU is that it describes or identifies a building, or part thereof, rather than land, as the titled property. Thus a bare land strata lot is not an RCU because it is not a building and hence not a residential complex. A residential complex that is constructed on a bare land strata lot is also not an RCU because it is not described as a separate unit on a strata lot plan. In consequence, no service that is provided to the owner or lessee of a strata lot by a strata corporation, qualifies for the section 13 exemption.

Issue 2:

Interpretation Requested

You have asked whether the exemption in section 13 of Part I of Schedule V to the ETA would apply to supplies by a corporation to a property that is located on an Indian reserve and that is not subject to the jurisdiction of XXXXX[.]

Interpretation Provided

Itis our view that supplies of property by a corporation to an owner or lessee of property in a development that is situated on an Indian reserve and that is not subject to the jurisdiction of XXXXX would be taxable.

The exemption in section 13 of Part I of Schedule V to the ETA is only available with respect to supplies that are made by a condominium or strata corporation to an owner or lessee of a residential condominium unit in a condominium complex managed by the condominium or strata corporation. A condominium or strata corporation is an entity that is created by legislation such as the XXXXX[.] There is no comparable federal legislation to create condominium corporations. If the provincial legislation does not apply, then no condominium or strata corporation comes into existence and the section 13 exemption is not available.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4393.

Yours truly,

Michael Ezri
A/Rulings Officer
Real Property Unit
Financial Institutions & Real Property Division
GST/HST Rulings and Interpretations Directorate