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
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 246139
Dear [Client]:
Subject: Underused housing tax (UHT) interpretation
Definition of “residential property”
We are writing in response to the correspondence of [mm/dd/yyyy], […], concerning a property described in a general scenario and whether the property is a residential property for UHT purposes. We apologize for the delay in this response.
All legislative references are to the Underused Housing Tax Act (UHTA) unless otherwise specified.
Based on your correspondence, we understand that your general scenario is as follows:
1. A residential strata complex, located in British Columbia, contains a bounded space that serves as a guest suite.
2. The guest suite is not registered separately as a standalone residential strata lot in the provincial land registration system. The guest suite is considered to be common property shown on a strata plan. The guest suite cannot be sold separately.
3. The guest suite is dwelling unit for UHT purposes.
INTERPRETATION REQUESTED
You would like to know if the guest suite is a residential property for UHT purposes.
INTERPRETATION GIVEN
Definition of “residential property”
The term “residential property” is defined in section 2 as follows:
residential property means property (other than prescribed property) that is situated in Canada and that is
(a) a detached house or similar building, containing not more than three dwelling units, together with that proportion of the appurtenances to the building and the land subjacent or immediately contiguous to the building that is reasonably necessary for its use and enjoyment as a place of residence for individuals;
(b) a part of a building that is 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 or immovable property owned, or intended to be owned, apart from any other unit in the building 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 house, unit or premises and that is reasonably necessary for its use and enjoyment as a place of residence for individuals; or
(c) a prescribed property.
Based on the general scenario you described, paragraph (b) of the definition of “residential property” is the only paragraph that could possibly apply to the guest suite, if the guest suite is a residential condominium unit.
The term “residential condominium unit” is not defined in the UHTA. For UHT purposes, the Canada Revenue Agency (CRA) interprets the term “residential condominium unit” to mean a bounded space in a building that is (or is intended to be) both of the following:
* designated or described as a separate unit in the building 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; and
* a dwelling unit.
The term “dwelling unit” is defined in section 2 as follows:
dwelling unit means a residential unit that contains private kitchen facilities, a private bath and a private living area.
For purposes of the definition of “dwelling unit,” the CRA interprets the term “residential unit” to mean a single self-contained set of rooms in a building or part of a building that is distinguished from any other such set of rooms in the building or part and that is characteristic of, and suitable as, a residence. A residential unit that does not contain private kitchen facilities, a private bath or a private living area is not a dwelling unit for UHT purposes.
Although the guest suite meets the definition of “dwelling unit” in section 2, the guest suite is not designated or described as a separate unit in the building on a registered condominium or strata lot plan or description, or a similar plan or description registered under the laws of a province. Consequently, it is not a residential condominium unit for UHT purposes, and therefore, it is not a property included in paragraph (b) of the definition of “residential property.”
For more information, please refer to Question 1.33 in Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, which can be found on the Canada.ca website.
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 interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the UHTA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
CONTACT
If you require clarification with respect to any of the issues discussed in this letter, please call Stacy Furlong at 902-719-7843.
Sincerely,
Chris Lewis
Manager
Real Property – Specialty Tax Unit
Financial Institutions and Real Property Division
GST/HST Rulings Directorate
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