GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
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Attention: XXXXX XXXXX
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September 22, 1998
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Subject:
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Prescribed Property
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This letter is in response to a memo submitted by XXXXX, Verification and Enforcement - GST Audit, XXXXX Tax Services Office concerning the application of section 259 of the Excise Tax Act (ETA), in particular "prescribed property" as identified in the Public Service Bodies (PSB) Rebate Regulations. We understand that questions related to real property have been answered in a letter to XXXXX on November 19, 1997 case No: HQC0000582.
Therefore, we will answer your request regarding the restriction of section 259 rebates for "elderly" tenants. We apologize for the delay in responding.
Statement of Facts
1. XXXXX is a registered charity under paragraph 149(1)(f) of the Income Tax Act. Their status has been reinstated effective April 1, 1993.
2. Article 2 of its Constitution provides that the purpose of the Society is, among other things: "To establish or acquire by purchase, gift, transfer, lease or otherwise, and to maintain and operate on a non-profit basis, senior citizens housing which incorporates a significant activity and social component, for persons in need of low rental housing accommodation."
3. XXXXX leases land from XXXXX a registered charity. The lease period is XXXXX[.]
4. XXXXX constructs residential complexes on the leased land. Residence in the complexes is restricted to individuals XXXXX years of age or older who become members of XXXXX.
5. Two residential complexes have been constructed. Phase I and Phase II each have XXXXX units. The Phase I and II units in the complexes are occupied under a life-time sublease agreement.
6. XXXXX also leases the XXXXX floor of a long term care facility operated by XXXXX[.] The XXXXX floor has been renovated by XXXXX to provide for XXXXX residential units. Individuals occupy the units on a monthly sublease with XXXXX[.]
7. XXXXX of the XXXXX units are specifically reserved for individuals who qualify for the XXXXX grants.
Issues
What age group constitutes "elderly individuals" for purposes of clause 4(1)(a)(i)(c) of the Public Service Bodies Rebate (GST) Regulations?
Responses
For purposes of clause 4(1)(a)(i)(c) of the Public Service Bodies Rebate (GST) Regulations there is no particular age group that constitutes "elderly individuals".
Explanation
Section 259 of the ETA provides a rebate of non-creditable tax to selected public service bodies, charities, and qualifying non-profit organizations except where the GST is paid in respect of prescribed property and services enumerated in section 4 of the Public Service Bodies Rebate (GST) Regulations. Pursuant to section 4, property and services supplied in the course of providing accommodations in a multiple unit residential complex, where all or substantially all of the units are not restricted to elderly individuals, are prescribed property and services. Therefore, property and services supplied in the course of providing accommodation in a multiple unit residential complex, where more than 10% of the units in the complex are restricted to "elderly individuals", are not "prescribed property" and will qualify for a rebate under section 259 of the ETA.
The ETA does not provide a definition for the term "elderly". However, for the purpose of applying the Public Service Body Rebate Regulations, the Department will consider that more than 10% of the units are restricted to elderly individuals if the supplier is a registered charity whose purpose is the relief of a need associated with old age. Also, if more than 10% of the units are designated for occupancy by individuals who have conditions normally related to aging, the Department will view the supply of the residential units as being restricted to elderly individuals. Finally, the Department will consider that more than 10% of the units are restricted to elderly individuals if the supplier can demonstrate that more than 10% of the units are specially designed for individuals who have conditions normally related to aging, given the nature of programs, services, equipment and facilities, available to the residents. These guidelines are not meant to be all-encompassing but are intended to offer some assistance in determining whether the supply of the residential units are restricted to elderly individuals.
XXXXX is registered with the Charities Division and has provided sufficient evidence of its charitable purpose i.e. relief of the aged. If it has met all the requirements to obtain a charity number for purpose of providing accommodation to elderly individuals and more than 10% of the units are restricted to these individuals, then it will be eligible to claim a rebate under section 259 of the ETA for property and services consumed, used, or supplied in the course of providing, by way of lease, license or similar arrangement, residential units in a residential complex.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-1175.
Yours truly,
Don Gagnon
Educational Services and Indians Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
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Pierre Bertrand
Paule Labbé
XXXXX
Don Gagnon |
Legislative References: section 259, section 4 of PSB Rebate Regs.
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