Please note that the following documents, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ces documents, bien qu'exacts au moment émis, peuvent ne pas représenter la position actuelle de l'Agence.
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON
K1A 0L5
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Case Number: 44366NCS: 11950-1
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Subject:
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GST/HST Ruling
Sale of XXXXX (the "Unit") XXXXX
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Dear XXXXX
This is in reply to your letter XXXXX and further to our telephone conversations XXXXX concerning the application of the Goods and Services Tax ("GST") to the subject sale. We apologize for the delay in responding.
All references are to the Excise Tax Act ("ETA") unless otherwise indicated.
Statement of Facts
1. The Unit is a residential condominium unit ("RCU").
2. XXXXX purchased the Unit XXXXX for use as his primary place of residence. The Unit had been previously occupied.
3. To finance the purchase of the Unit, XXXXX borrowed money from XXXXX (the "Creditor") to whom he granted a mortgage in respect of the Unit.
4. In XXXXX a fire destroyed the top XXXXX floor of the residential condominium complex (the "RCC") containing the Unit.
5. During the three weeks leading up to the fire, XXXXX had leased the Unit on a long-term basis to tenants who used it as a place of residence.
6. While the fire was confined to the XXXXX level of the RCC, the RCUs on the XXXXX levels were severely water-damaged. As a result, the residents of the XXXXX RCUs comprising the RCC were required to vacate the premises.
7. An insurance claim was commenced in respect of the RCC, which resulted in the rebuilding of the complex. The RCC was rebuilt by a contractor under the supervision of the insurance company.
8. The insurance claim covered the cost of the rebuilding process, which is estimated at approximately $XXXXX.
9. Although the exterior walls and foundation remained in place, we understand that the RCC was essentially stripped back to its frame and the following elements replaced: the roof, all drywall, insulation, floor coverings, cabinetry, lighting fixtures, appliances, some floors, a balcony, and some of the interior supporting walls separating the RCUs. We are further advised that some windows and doors on the top floor of the complex were replaced while the remaining windows and doors, as well as the elevator, remained.
10. The RCC remained vacant for approximately XXXXX until the rebuilding process was complete.
11. Before completion of the rebuilding process, XXXXX defaulted on his mortgage payments. To recover the outstanding amount of the mortgage, the Creditor, XXXXX commenced an action XXXXX to cause a judicial sale of the Unit.
12. The court directed the Creditor to conduct a sale of the Unit, subject to the court's approval. In the interim, XXXXX retained his ownership interest in the Unit and had the ability to redeem the Unit until the time of sale.
13. XXXXX declared personal bankruptcy XXXXX (the "Trustees") was named as trustee of the bankrupt. A receiver did not have authority in respect of the Unit.
14. XXXXX issued an occupancy permit relating to the RCC in XXXXX[.] The RCC now resembles its condition prior to the fire, albeit with much new material.
15. The sale of the Unit was approved by the court. XXXXX subsequently completed the sale XXXXX XXXXX remained the registered owner of the Unit until that time.
16. The court directed a part of the proceeds from the sale to the Creditor to extinguish the amount owing under the mortgage.
17. The Unit was not leased or otherwise occupied subsequent to the rebuilding process and prior to its sale.
18. None of XXXXX, the Trustees, nor the Creditor claimed input tax credits in respect of the Unit.
Ruling Requested
The sale of the Unit is exempt from the GST.
Ruling Given
The sale of the Unit is exempt from the GST.
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 ETA or to our interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.
Should you have any further questions or require clarification on the above or any other GST or Harmonized Sales Tax matter, please do not hesitate to contact me at (613) 952-8816.
Yours Truly
Paul Hawtin
Rulings Officer
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
| Legislative References: |
Excise Tax Act subs. 123(1): definitions of "builder" "substantial renovation", "residential complex", "residential condominium complex", "residential unit"; ss. 183(1), ss. 183(10)[,] s. 2/I/V, s. 4/I/V |
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| NCS Subject Code(s): |
11950-1 |
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