30 March 1999 GST/HST Interpretation HQR0001698 - Purchase of Real Property

Dear Mr. XXXXX

Thank you for your letter of March 10, 1999 which is a follow-up to a conversation between XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase of real property by the XXXXX[.]

Interpretation Requested

You have requested confirmation that the XXXXX will not have to pay or self-assess the HST on the purchase of real property.

Interpretation Given

We confirm that the XXXXX will not have to pay or self-assess the HST on the purchase of real property.

Explanation

Subsection 221(2) of the Excise Tax Act (ETA) provides exceptions to the requirement for a supplier to collect tax from the recipient of a taxable supply. In particular, paragraph (b) of this subsection sets out that where a registrant is the recipient of a supply of real property, and the supply is not a supply of a residential complex made to an individual, the supplier is not required to collect the tax payable by the recipient. Based on this subsection of the ETA, the XXXXX is not required to pay the HST to a supplier on the purchase of real property. However, by virtue of subsection 228(4), recipients of a taxable supply of real property are required to self-assess the tax payable on their purchase and to pay this amount to the Receiver General. Although the XXXXX XXXXX requires XXXXX to pay tax in respect of any purchase of taxable supplies, including the supply of real property, it also provides a rebate mechanism for any tax paid. Since the tax self-assessed under subsection 228(4) would be fully rebated to the XXXXX in any event, the Department will not require the XXXXX to self-assess this tax.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Brent Fleming at (613) 952-0370.

Yours truly,

P. Bertrand
A/Director
Public Service Bodies and Government Division
GST/HST Rulings and Interpretations Directorate