Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 193655a
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…] Tax status of common expense fees
Thank you for your correspondence dated [mm/dd/yyyy], requesting a reconsideration of the goods and services tax/harmonized sales tax (GST/HST) ruling issued on [mm/dd/yyyy] concerning the application of the GST/HST to common expense fees charged to owners of parking slips and bicycle storage units. […]. Although the ruling in the letter dated [mm/dd/yyyy] remains unchanged, an amended letter is being sent to you in order to clarify certain aspects of the response […].
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
SUMMARY OF FACTS
On [mm/dd/yyyy], a ruling was issued for case 193655 to […](the Corporation), a non-profit organization. The Corporation was established in [yyyy] in […][Province X] for the purpose of governing the maintenance of property described in […](the Plan), which is a parking building containing [#] parking slips and [#] bicycle storage units located [in Province X] at […][municipal address]. The ruling issued in that case was with respect to common expense fees charged to owners of these parking slips and bicycle storage units.
The Corporation’s parking building is in very close proximity to [#] […] residential condominium buildings, which also have parking slips. These residential condominium buildings each have a condominium corporation. There is a shared facilities agreement between the Corporation and the [#] neighbouring condominium corporations to acknowledge shared spaces with respect to the underground parking linked under the […] buildings. The […][shared facilities agreement] stipulates the portion of costs to be paid by each condominium corporation for maintenance of the shared space and the equipment used by more than one condominium corporation, such as a door or garage gate. Given the close proximity of […][the Corporation’s parking building and the [#] residential condominium] buildings, there are also rights-of-way registered on title between […][those] properties.
The Corporation’s only supplies are the supply of parking slips and bicycle storage units to residents of the [#] neighbouring condominium buildings. […].
RULING REQUESTED
In your letter dated [mm/dd/yyyy], you requested a reconsideration of the ruling, dated [mm/dd/yyyy], which stated that the common expense fees charged to owners of the parking slips and bicycle storage units in the parking building were subject to the GST/HST.
RULING GIVEN
Based on the facts set out above, and a careful review of the additional analysis provided in your letter of [mm/dd/yyyy], we confirm our initial ruling that the common expense fees charged to owners of a parking slip or bicycle storage unit in the parking building are subject to the GST/HST.
EXPLANATION
[…], the exempting provision that may apply in this case is in section 13 of Part I of Schedule V:
“A supply of property or a service, made by a corporation or syndicate established upon the registration, under the laws of a province, of a condominium or strata lot plan or description or similar plan or description, to the owner or lessee of a residential condominium unit described by that plan or description, if the property or service relates to the occupancy or use of the unit.” [Emphasis added]
Although there are [#] neighbouring condominium buildings, each with their own condominium corporations, and there are agreements in place for rights-of-way as well as cost-sharing for maintenance of shared spaces, this is not relevant to the application of section 13 of Part I of Schedule V. In this provision, there is an exemption for a supply of a service made by a condominium corporation to the owner of a residential condominium unit described in the condominium plan for which the condominium corporation was created. In this case, the Corporation manages the property described on the Plan. “Residential condominium unit” (RCU) is defined in subsection 123(1) as:
“A residential complex that is, or is intended to be, a bounded space in a building designated or described as a separate unit on a registered condominium or strata lot plan or description, or a similar plan or description registered under the laws of a province, and includes any interest in land pertaining to ownership of the unit.”
The RCU, which includes any interest in the land pertaining to ownership of the unit, must be designated or described on a particular registered condominium or strata lot plan. Generally, the registered condominium or strata lot plan or description would show each lot with legal descriptions. This type of plan is not to be confused with an architectural plan, which lacks these types of details. […]. In this case, any RCUs located in neighbouring buildings are described on other registered condominium or strata lot plans and not on the Plan. Since there are no RCUs on the Plan, section 13 of Part I of Schedule V does not apply and, consequently, the common expense fees charged to owners of the parking slips and bicycle storage units are taxable.
The CRA is responsible for the administration of the ETA and its Regulations as enacted by Parliament. Legislative amendments are a matter of tax policy, which falls within the responsibility of the Department of Finance Canada.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 506-349-7596. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Nicole Collins
Real Property 2 Unit
Financial Institutions and Real Property Division
GST/HST Rulings Directorate
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