24 August 2000 GST/HST Ruling 13416 - Sale of Real Property to

Dear XXXXX:

Thank you for your letter of November 10, 1999 with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction described below.

Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency.

Statement of Facts

Our understanding of the facts and the transaction is as follows:

1. Your client acquired Lot XXXXX and Lot XXXXX, XXXXX XXXXX on August 17, 1987. The deed was registered as instrument number XXXXX. Certified copies of the abstracts were enclosed with your letter.

2. Lot XXXXX was legally divided in 1917, deed number XXXXX. Lot XXXXX merged back together in 1945 whenever XXXXX took ownership of both the east and west half portions of the lot. Lot XXXXX was never divided and remains undivided to date.

3. In 1994, Lot XXXXX was surveyed and subdivided into two pieces. A copy of Plan XXXXX shows the east half of the lot as Part 1. Part 1 on this plan was deeded to XXXXX (your client's daughter) by instrument number XXXXX. The remaining part of the lot, the west half, was then deeded to XXXXX by instrument number XXXXX. Part 1, Plan XXXXX was immediately deeded back to your client by instrument number XXXXX. All transfers took place minutes apart on June 24, 1994.

4. Prior to obtaining the severance, your client could not deal with Lot XXXXX or Lot XXXXX independently of the other due to the rules under the XXXXX Planning Act. After obtaining Planning Act consent to sever the east half of Lot XXXXX, the legal result was that your client could now sell three pieces of land separately. The three pieces are Lot XXXXX and the east and west halves of Lot XXXXX[.]

5. Your client is now selling Part 1, XXXXX to a third party arm's length purchaser, XXXXX[[.]

6. Part 1, XXXXX is vacant land. Lot XXXXX consists of 100 acres and your client's residence is situated on this lot.

7. Your client did not use the property primarily as capital property in a business carried on by your client with a reasonable expectation of profit.

8. Your client is not selling the property in the course of a business.

9. There has been no change in use of the property.

Transaction(s)

Your client is selling Part 1, XXXXX which is vacant land to XXXXX.

Ruling Requested

You request a ruling with respect to the tax status of the supply by way of sale by your client of Part 1, XXXXX to XXXXX.

Ruling Given

Based on the facts set out above, we rule that the supply by way of sale of Part 1, XXXXX by your client to XXXXX is exempt from the GST pursuant to section 9 of Part I of Schedule V to the Excise Tax Act (ETA).

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) 952-8816.

Yours truly,

Anne Kratz
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate