GST/HST Memorandum 19.2.3 “Residential Real Property - Deemed Supplies” June 1998

Purpose of self-supply rules: level playing field

5. The self-supply rules.. apply only to "builders" and their purpose is to remove the potential tax advantage a builder would have in constructing or substantially renovating a residential complex and then offering the residential complex for rent or appropriating it for the builder's personal use. A person who is not a builder who wanted to do the same would have to purchase the new or substantially renovated residential complex in a completed state from a builder and would have to pay GST/HST on the purchase. In the absence of the self-supply rules, the builder who constructs or substantially renovates a residential complex would generally experience a competitive advantage through tax savings on the non-taxable value that is added to the residential complex, such as the value of employed labour, financing costs and profit which would otherwise be realized through the sale price established by a builder who sells the residential complex. …

"Rent-to-own" vs "sale" Policy statement P-164 …

16. … Because the self-supply rules apply only where there is a supply by way of lease, licence or similar arrangement, it is necessary to determine if a rent-to-own agreement represents a supply by way of sale or a supply by way of lease, licence or similar arrangement.

Time of "substantial completion"

11. Generally, substantial completion occurs before occupancy is given to the first individual. For GST/HST purposes, "substantial completion" means that the construction or substantial renovation of the complex is at a stage of completion (generally, 90% or more) so that an individual is able to reasonably inhabit the premises. Minor repairs, adjustments or upgrades that are still outstanding do not reasonably impair the use and enjoyment of the housing unit as a place of residence. If possession is given before substantial completion, the tax liability does not arise from self-supply until the time of substantial completion. In any case, substantial completion is deemed to occur no later than the time when 90% of the units in the complex are occupied.