28 March 2001 GST/HST Ruling 31166 - Shares of the Capital Stock and Assignment of Occupancy Rights

Dear Madam:

We are writing in response to your letter of May 1, 2000 (with attachment) addressed to our XXXXX, concerning the GST/HST application to the purchase of XXXXX shares of the capital stock of XXXXX and the assignment of the occupancy rights to certain lands and premises owned by the company. We apologize for the delay in responding to your enquiry.

Statement of Facts

Based on the documentation provided and the telephone conversations with you, our understanding of the facts of your situation is as follows:

1. XXXXX (the "Company") is the registered owner of certain lands and premises located on XXXXX more particularly known XXXXX (the "Lands").

2. The Company and its shareholders had determined to confirm and grant to each shareholder rights of occupation to portions of the Lands. The Company and an individual shareholder (the "Occupant") entered into an agreement (the "Occupancy Agreement") dated XXXXX whereby the Company granted the Occupant the rights of exclusive occupancy of the portion of the Lands (the "Premises") per the schedule attached thereto and entitled Parcel 2; and also the right, in common with agents and contractors of the Company, other shareholders and occupants of the Lands and their representative guests to use certain common area (the "Common Area") of the Lands for the purpose of access to and egress from the Premises ("collectively referred to as "Occupancy Rights".) The Occupant is the holder of XXXXX of the XXXXX issued and outstanding shares of the Company and is the beneficial owner of an undivided 1/12 of the assets of the Company.

3. The Occupant shall have and hold the Premises for a term beginning with the agreement date, continuing for a term of XXXXX years, and ending on the 1st day of XXXXX, subject to certain provisions as described in the Occupancy Agreement.

4. The Occupancy Agreement contains, among other things, the following provisions: XXXXX[.]

5. The Premises does not include a residential complex.

6. The Occupant is an individual who acquired the Premises for use for his own recreational purposes, and has used the Premises for such purposes only.

Transactions

1. You wish to enter into an agreement with the Occupant to purchase from the Occupant:

a) the XXXXX outstanding shares (the "Shares") of the Company, and

b) the assignment of the Occupancy Agreement made between the Occupant and the Company on XXXXX.

2. Within a reasonable period of time after the purchase of the Shares and the assignment of the Occupancy Agreement from the Occupant, you intend to affix a house or a cottage to the Premises for use as your place of residence.

Ruling Requested

GST is not applicable to the purchase of the Shares and the assignment of the Occupancy Agreement.

Ruling Given

Based on the facts set out above, we rule that GST is not applicable to the purchase of the Shares and the assignment of the Occupancy Agreement from the Occupant.

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, 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 the transactions 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) 954-1433.

Yours truly,

Phil Tang
Specialty Tax Unit
Financial Institutions & Real Property Division
Excise and GST/HST Rulings Directorate

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