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, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 244179
Dear [Client]:
Subject: GST/HST RULING
Supplies made by a strata corporation to the owner of a unit described by the strata plan as a non-residential unit, where the unit is used by the owner for residential purposes
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies made by a strata corporation to the owner of a unit described by the strata plan as a non-residential unit, where the unit is used by the owner for residential purposes.
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.
STATEMENT OF FACTS
We understand the following:
1. You are the representative of […] the “Corporation”.
2. The Corporation is a strata corporation established upon registration of […] (the “Strata plan”).
3. The Strata plan is comprised of [#] non-residential strata lots and [#] residential strata lots.
4. The property is situated in [Province A].
5. The [...] non-residential units are described on the Strata plan as non-residential, and are zoned by the municipality for non-residential use only.
6. The Corporation has recently exceeded the small supplier threshold and has started charging GST on its supplies related to the four units described on the Strata plan as non-residential units.
7. You were informed by the owners of […][some] of the units described on the Strata plan as non-residential (strata lots […]) that the owners are using these units (the “Units”) as their place of residence, despite the zoning and Strata plan description.
RULING REQUESTED
You would like to know whether the supplies made by the Corporation to the owners of the Units are exempt.
RULING GIVEN
Based on the facts set out above, in particular the fact that the Units are each occupied by an individual as a place of residence, we rule that the supply of property or a service by the Corporation (otherwise known as the “Condominium fees”) to the owners of the Units described as strata lots [...] are exempt supplies pursuant to section 13 of Part I of Schedule V to the ETA.
EXPLANATION
For purposes of this ruling, we assume that the Units contain the amenities necessary for residential occupancy, since you have stated the owners are using them as their place of residence.
Section 13 of Part I of Schedule V to the Act exempts “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”.
The terms “residential condominium unit” and “residential complex” are defined in subsection 123(1).
If a condominium unit is not a residential complex, the unit is not a residential condominium unit for GST/HST purposes and the exemption under section 13 of Part I of Schedule V to the Act will not apply to a property or service supplied by a condominium corporation to the owner of the unit.
Each supply to each owner of a condominium unit must be analyzed separately to establish whether the supply is taxable or exempt pursuant to section 13. It is a question of fact as to whether a particular unit is a residential complex and a residential condominium unit for GST/HST purposes.
Consequently, we must determine if the Units are residential complexes and residential condominium units as per 123(1).
Paragraph (b) of the definition of “residential complex” in subsection 123(1) states:
(b) that part of a building that is
(i) the whole or part of a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that is, or is intended to be, a separate parcel or other division of real property owned, or intended to be owned, apart from any other unit in the building, and
(ii) a residential unit,
together with that proportion of any common areas and other appurtenances to the building and the land subjacent or immediately contiguous to the building that is attributable to the unit and that is reasonably necessary for its use and enjoyment as a place of residence for individuals.
Further, a “residential unit” is defined in subsection 123(1) as:
(a) a detached house, semi-detached house, rowhouse unit, condominium unit, mobile home, floating home or apartment,
[…]
or that part thereof that
(d) is occupied by an individual as a place of residence or lodging,
[…]
The Units in the present case meet the conditions of the definition of “residential unit” in subsection 123(1) as they are “condominium units”, as described in (a), and are occupied by an individual as a place of residence.
The Units also meet the definitions of “residential complex” and “residential condominium unit” in subsection 123(1) since they are “residential units” that are “a separate parcel or other division of real property owned, or intended to be owned, apart from any other unit in the building”.
The requirements of section 13 include that the service must be made by a corporation established upon the registration of the strata plan and that the service must relate to the occupancy or use of the Units. As per the facts set out above, these two conditions are met. The final requirement is that the supply must be made to an owner of a residential condominium unit described by the strata plan. We have determined above that the Units meet the definition of “residential condominium unit” in subsection 123(1). Since the Units are described on the strata plan, even though they are described as non-residential on that plan, they are residential condominium units according to the definition of the ETA, and the supply of the Condominium fees to the owners of those Units meet all the requirements of section 13.
Accordingly, the supplies of Condominium fees by the Corporation to the owners of the Units will be exempt supplies under section 13 of Part I of Schedule V.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (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 613-291-0073. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Stéphanie Blanchette
Senior Rulings Officer
Real Property Unit 2
Financial Institutions and Real Property Unit
GST/HST Rulings Directorate
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