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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 154604
Business Number: [...]
July 15, 2013
Dear [Client]:
Subject: GST/HST RULING
Sale of bare land
Thank you for your letter of [mm/dd], 2013 [...], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a parcel of real property (the Property) that you and your husband [...] have listed for sale in British Columbia.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand the facts to be as follows:
1. The Property consists of [...] acres of bare land, is legally described as [...][the Property] and is located in [...].
2. You and your husband acquired the Property in [yyyy] and you own the Property as joint tenants.
3. You purchased the Property as a potential retirement property. You have not subdivided or severed the Property, nor did you sever the Property from other real property.
4. Since [yyyy] you have used the Property primarily in renting it to farmers who used it to either cut the hay or graze cattle. However, the revenue generated from this activity did not cover the expenses of property taxes and irrigation and you do not have a reasonable expectation of profit from renting the Property.
5. Neither you nor your husband are currently registered for GST/HST purposes as individuals, nor are you required to be so registered. Our records indicate that a partnership of you and your husband has been assigned a GST/HST registration number, but you indicated that you are simply two individuals who own real property and you have in fact not formed a partnership.
6. You have not yet sold the Property or entered into an agreement of purchase and sale to sell it, but you are planning to sell it.
Ruling Requested
You would like to know whether the sale of the Property is subject to the GST.
Ruling Given
Based on the facts set out above, we rule that the sale of the Property is exempt from GST.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
ADDITIONAL INFORMATION
The above ruling is based on neither you nor your husband, as individuals, being "registrants" (i.e., registered or required to be registered for the GST/HST) at the time of selling the Property (generally, at the time the agreement of purchase and sale is entered). If you or your husband is a registrant at the time of selling the Property and it is capital property used primarily in renting it at the time of the sale, your sale of the Property would be excluded from exemption by virtue of subparagraph 9(2)(a)(ii) of Part I of Schedule V to the Excise Tax Act. In that case, the sale of the Property would be subject to the GST at 5%.
If your sale of the Property were subject to GST, you would be required to collect the tax payable on the sale unless the recipient of the sale is registered for GST/HST purposes. In that case, the recipient of the sale of the Property will be required to pay the GST to the Receiver General rather than you collecting the GST payable on the sale.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-8852. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Hugh Dorward
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
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