CRA finds that an adjustment for municipal taxes and the assignment of tenant leases form part of a single supply of a sale of an office tower

A vendor transfers an office tower without a s. 167 election being made. Where the Statement of Adjustments provides for a reimbursement to the vendor at closing for the portion of prepaid property taxes relating to the post-closing period, CRA would regard this as an increase to the sale price for the office tower rather than as a non-taxable reimbursement of the taxes paid as agent for the purchaser, so that generally no GST/HST would be charged under ETA s. 221(2).

Similarly, the assignment by the vendor of the tenant leases would be considered to form part of the single supply of the building where none of the purchase price was allocated to the leases.

Neal Armstrong. Summaries of 28 February 2019 CBA Roundtable, Q.12 under ETA s. 221(2) and General Concepts – Agency.