11 September 2000 GST/HST Ruling 11601-3 - Entitlement to Claim Input Tax Credits

Dear XXXXX

Thank you for your letter of July 27, 2000 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

It is our understanding, as noted in your written submission, that the issues contained herein were brought forward by XXXXX with the XXXXX. You have requested an application ruling to determine how the Nominee and the Owner should treat ongoing transactions under Part IX of the Excise Tax Act (ETA), thereby confirming your current practice of GST reporting in connection with transactions pertaining to the development of the Property.

Statement of Facts

Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) is as follows:

1. XXXXX (the "Nominee") is a corporation continued under the Federal laws of Canada. The Nominee is registered for purposes of the GST.

2. XXXXX (the "Owner") is a corporation continued under the Federal laws of Canada. The Owner is registered for purposes of the GST.

3. The Nominee is the registered legal owner of certain lands located in the XXXXX (the "Property"). Under the terms of the Nominee Agreement, XXXXX, made between the Nominee and the Owner, the Nominee acknowledged that it held legal title to the Property as bare trustee for and on behalf of the Owner.

4. Under the terms of the Nominee Agreement, the Nominee agreed to deal with the Property only on the directions of the Owner and to execute and deliver all agreements, leases, covenants, instruments and assurances required by Owner from time to time in connection with the Property.

5. The Owner is developing the Property and is carrying on all of the commercial activities related thereto.

6. The Nominee has contracted on behalf of the Owner for the supply of goods and services from third parties in connection with the development of the Property for which GST has been paid. All invoices for the supply of the goods and services and any contracts or agreements related thereto are in the name of the Nominee.

7. The Owner, as the beneficial owner of the Property, files the GST returns required under the ETA, accounts for any GST collected and claims input tax credits for GST paid.

8. The Nominee has provided a written undertaking to the local tax services office not to claim input tax credits for any of the GST paid by the Owner in connection with the supply of any goods or services made to develop the Property.

Ruling Requested

A. That the Owner will be entitled to claim input tax credits in connection with the GST paid on the inputs that are consumed, used or supplied in the course of the development of the Property pursuant to the Canada Customs and Revenue Agency's (CCRA's) administrative policy with respect to treatment of bare trusts under the ETA.

B. That the Nominee will be considered the Owner's authorized agent or representative for purposes of the Input Tax Credit Information Regulations (Regulations) and the Owner will be entitled to claim input tax credits with respect to GST paid on contracts or invoices in the name of or addressed to the Nominee as recipient of inputs supplied in connection with the development of the Property by the Owner. That is, the Owner will meet the documentary requirement to support its claim for input tax credits if the recipient identified in the supporting documentation is the Owner or the Nominee.

Ruling Given

Based on the facts set out above and consistent with CCRA's administrative position concerning bare trusts and nominee corporations, we rule as follows:

A. The Owner is entitled to claim input tax credits in connection with the GST paid in the course of development of the Property.

B. The Nominee may be considered to be the Owner's representative for purposes of the Regulations. Invoices and contracts supporting the Owner's claim for input tax credits, identifying either the Nominee or the Owner as the recipient of the supplies, along with the Nominee Agreement, satisfy the documentary requirements as prescribed in the Regulations.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST 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 Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8226.

Yours truly,

Indra Singh
Corporate Reorganizations Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate