22 April 2002 GST/HST Interpretation 40101 - Goods and Services Tax (GST) Applies to a Purchase of Real Property by a Church Organization

Dear XXXXX:

Further to our telephone conversation of April 16, 2002, I am writing to provide you with a general explanation as to how the Goods and Services Tax (GST) applies to a purchase of real property by a church organization.

For GST purposes all supplies of land by way of sale are taxable unless specifically exempted. Those supplies of real property that are exempt are listed in Schedule V to the Excise Tax Act. Exempt supplies of real property made by persons other than public service bodies or charities, such as a corporation, are listed in Part I of Schedule V. A copy of Part I of the Schedule is attached for your reference. None of the provisions of Part I apply to the circumstances you described.

As a mechanism for providing relief from the GST to certain types of purchasers acquiring real property for non-commercial purposes, the Excise Tax Act provides for a rebate of all or a portion of the GST paid. One of the persons that qualify for rebates of the GST in certain circumstances are "charities", as defined for purposes of Part IX of the Excise Tax Act. An example of a "charity" for GST purposes is a church organization that is a "registered charity" for purposes of the Income Tax Act. Where such a charity makes a taxable purchase of a parcel of land for use in its religious (i.e. non-commercial) activities, it will generally qualify for a 50% rebate of GST paid.

If you require assistance for the purpose of claiming a public service body rebate in respect of a taxable purchase of land you may wish to contact XXXXX.

For your reference, in addition to Part I of Schedule V, I have attached a copy of the relevant portions of the Excise Tax Act that could apply to sales of real property (e.g. land) made by a corporation to a charity.

I trust that this provides you with a general understanding of how the GST applies to purchases of real property in the context of your situation. If you require any further assistance please do not hesitate to contact Costa Dimitrakopoulos at (613) 954-3772 or myself at (613) 952-9248.

Sincerely,

Ivan Bastasic
Director
Financial Institutions and
Real Property Division
Excise and GST/GST Rulings