23 October 2002 GST/HST Interpretation 41949 - Industrial/Commercial Condominium Corporations

Dear XXXXX:

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) in regards to industrial or commercial condominium corporations.

All legislative references are to the Excise Tax Act (ETA) unless otherwise noted.

From your letter and telephone conversations of XXXXX, our understanding of the situation is as follows:

1. A commercial condominium corporation with common element fees of XXXXX.

2. A commercial condominium corporation with common element fees of XXXXX.

3. A commercial condominium corporation that is part residential and part commercial with the commercial share of the common element fees being XXXXX.

4. A condominium corporation that is part residential and part commercial with the commercial share of the common element fees being XXXXX.

You have confirmed by telephone conversation that the common element fees referred to above are annual totals and not monthly as originally stated in your letter.

Ruling Requested

Whether the condominium corporations in the above four situations are required to register and collect GST on the common element fees.

Although your request is for an application ruling, we do not have all the facts necessary on which to issue a ruling. An application ruling provides CCRA's position on specific provisions of the legislation as these relate to a clearly defined fact situation of a particular person.

GST/HST Memoranda Series Chapter 1.4, Goods and Services Tax Rulings (enclosed for your reference), describes circumstances where rulings should and should not be issued. In paragraph 20 of that document, it is indicated that a request for a GST/HST ruling may be refused when a matter on which a determination is requested is primarily one of fact, and the circumstances are such that all the pertinent facts cannot be established at the time of the request. Paragraph 14 further indicates that a GST ruling applies only to the person who requests it or on whose behalf it is requested, and applies only to the specific activities described.

As discussed in our telephone conversation of XXXXX, one of the facts to be determined is whether the particular condominium corporation qualifies as a public service body (e.g. non-profit organization) for purposes of the $50,000 small supplier threshold. As noted above, an application ruling relates to "a clearly defined fact situation of a particular person". In this case, we do not have confirmation of the particular person on whose behalf the request for ruling (whether the person is required to register) is made. However, as agreed in our telephone discussion, we can provide an interpretation of the relevant portions of the legislation.

Interpretation Given

Based on the information provided, where the condominium corporation exceeds the small supplier threshold, as provided under subsection 148(1) of the ETA, the corporation will be required to register pursuant to subsection 240(1) and collect GST on taxable supplies it makes in relation to its commercial or industrial units.

In general, every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST purposes.

A "commercial activity" of a person, as defined in subsection 123(1) of the ETA, includes a business carried on by the person, or an adventure or concern of the person in the nature of trade, except to the extent it involves the making of exempt supplies by the person. It also includes making a supply (other than an exempt supply) of real property, including anything done by the person in the course of or in connection with the making of the supply.

One exception to the registration requirement is for a person who is a small supplier.

A person is a small supplier during any particular calendar quarter and the following month if the total value of the consideration for world-wide taxable supplies, including zero-rated supplies, made by the person (or an associate of the person at the beginning of the particular calendar quarter) that became due, or was paid without becoming due, in the previous four calendar quarters does not exceed $30,000 or, where the person is a public service body, $50,000. The calculation excludes consideration attributable to the sale of goodwill of a business, supplies of financial services, and supplies by way of sale of capital property.

However, a person ceases to be a small supplier at any time in a calendar quarter if the total value of the consideration that becomes due, or is paid without becoming due, in that quarter for world-wide taxable supplies made by the person, or an associate of the person at the beginning of the calendar quarter, exceeds $30,000 or, if the person is a public service body, $50,000. The person ceases to be a small supplier immediately before the consideration becomes due or is paid for the particular taxable supply that puts the person over the $30,000 or $50,000 small supplier threshold.

For GST/HST purposes, a "public service body" is defined as a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university. These terms are defined in subsection 123(1) of the ETA.

Section 13 of Part I of Schedule V to the Act provides an exemption for certain supplies made by a condominium corporation. Section 13 is intended to exempt condominium fees charged to residential condominium owners or lessees. This section requires that the supply be in respect of a residential condominium unit and that it relates to the occupancy or use of the unit. Supplies in respect of industrial or commercial condominium units would not qualify for exemption under this section. Therefore, except where a condominium corporation qualifies as a small supplier, the corporation will be required to register and collect GST on supplies relating to commercial or industrial condominium units.

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 Canada Customs and Revenue Agency 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 me at 952-9212.

Yours truly,

Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate