Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX K1A 0L5
XXXXX
This is in response to your letter of May 6, 1997, concerning XXXXX and the provision of subsidized housing.
XXXXX is a school authority that is not registered for purposes of the Goods and Services Tax (GST). It operates XXXXX schools in communities across XXXXX provides subsidized housing to the teachers throughout its Division. XXXXX has requested a ruling as to whether it is eligible for a rebate on the subsidized accommodation it provides to its employees.
Request
You have requested our comments on clause 4(1)(a)(i)(H) of the Public Service Body Rebate (GST) Regulations and whether that clause applies to XXXXX
Response
Section 259 of the ETA provides a rebate of non-creditable tax to selected public service bodies, charities, and qualifying non-profit organizations unless 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 clause 4(1)(a)(i)(H), prescribed property and services include supplies used in the course of providing accommodation in a multiple unit residential complex where 90% or more of the units are not restricted to individuals for whose benefit no other persons, other than public sector bodies, pay rent for the supply of the accommodation and who pay no rent or who pay rent that is significantly less than that charged by commercial businesses for such accommodations.
A selected public service body, charity, or NPO, that provides accommodation in a multiple unit residential complex, free or at a significantly reduced rent, where more than 10% of the accommodation is reserved for individuals at similar rents, may be entitled to claim a rebate on the property and services used in the provision of these accommodations, assuming they are not prescribed under another paragraph of section 4 of the Public Service Bodies Rebate (GST) Regulations.
For example, assume that a charity is the owner of a multiple unit residential complex. The charity reserves over 30% of the units in the building to be leased to individuals at no cost, another 20% is leased to individuals for amounts significantly less than the normal rental rates in that area, and the other 50% is leased to individuals at full or near market value. Property and services consumed by the charity in the provision of accommodation in this complex would not be considered prescribed property and services; as such the charity would be eligible for a rebate in respect of these property and services.
On the basis of the above, it does not appear that subparagraph 4(1)(a)(i) will apply to XXXXX since, as stipulated under clause (H), more than 10% of its residences are occupied by individuals who pay no rent or (we presume) rent that is significantly less than market rent. Even if XXXXX paid rent on behalf of its tenant, it would be excluded from subparagraph 4(1)(a)(i) under clause (H), since it is a public sector body. However, it should be considered whether another paragraph of section 4 applies, in particular paragraph (g) or (h).
Pursuant to paragraph 4(1)(g), property or services that are acquired by a charity, NPO, or selected public service body for the personal use of its employee, are considered to be prescribed. This is not the case if the employee pays an amount that is equal to the fair market value of the property and service or, the property or service is provided free to the employee and the employee is not required to report an amount as a benefit pursuant to section 6 of the Income Tax Act (ITA).
Pursuant to paragraph 4(1)(h), where property and services are made available to an individual (e.g. employee), and an amount is added in computing the income of that individual, pursuant to paragraph 6(1)(a) of the ITA (e.g. board or lodging), and subsection 173(1) does not apply (for example, the supply of accommodation is exempt of tax), or a supply is deemed under that subsection to have been made but no tax is payable in respect of that supply, the property and services are prescribed.
With respect to XXXXX we do not have sufficient information to determine whether paragraphs 4(1)(g) or (h) apply.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.
Yours truly,
Dwayne Moore
Rulings Officer
Charities, NPOs, and Educational Services Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
E. Vermes
M. Place
D. Moore
P. Labbé |
XXXXX
XXXXX
XXXXX
Legislative References: section 259, section 4 of the public service body rebate (GST) regulations.
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