CRA finds that having a purpose of selling an apartment building is consistent for GST/HST purposes with holding each apartment for the purpose of leasing it

In order for a builder of a multiple unit residential complex to receive the new residential rental property rebate, the included residential units must qualify as “qualifying residential units.” One of the relevant requirements (in s. (a)(ii)(A.1) of the definition of “qualifying residential unit”) is that the unit is held by the builder for the purpose of making exempt supplies of residential accommodation to a person “under a lease … for the purpose of its occupancy by an individual as a place of residence.” CRA found that this requirement can be satisfied even where, by the time for testing the eligibility for the rebate (i.e., at the time of the self-supply under s. 191(3) at the later of substantial completion and first occupancy), the builder had agreed to sell the whole complex.

CRA helpfully reasoned that “the terms ‘residential complex’ and ‘residential unit’ … are two distinct things,” so that:

[T]he Builder can hold the Complex (a residential complex) for the purpose of making a supply by way of sale to the Purchaser, and also hold the residential units contained therein for the purpose of making exempt supplies of the units by way of lease to individuals who will occupy the units as a place of residence.

Neal Armstrong. Summary of 10 October 2019 GST/HST Interpretation 193324 under ETA s. (a)(ii)(A.1) of the definition of “qualifying residential unit” in s. 256.2(1).