Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 14th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 104658
September 10, 2008
Subject:
GST/HST RULING
Purchase of Real Property
Dear XXXXX:
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase of real property by the XXXXX (the Church).
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified. As the real property is located in a non-participating province, no further references will be made to the HST.
Statement of Facts
We understand that the Church is a registered charity for income tax purposes. The Church is not registered for GST/HST purposes. The Church recently purchased real property (the Property) to be used as a house of worship. The Property is located at XXXXX and is legally described as XXXXX.
The Property was purchased from XXXXX (the Vendors) of XXXXX. The purchase price was XXXXX.
The Property includes a one story building constructed in XXXXX by the Vendors. The building has a total area of XXXXXsq ft. The Vendors leased the Property as office space.
Ruling Requested
You would like to know if the Church is required to pay GST in respect of the purchase of the Property.
Ruling Given
Based on the facts set out above, we rule that the supply by way of sale of the Property by the Vendors to the Church is a taxable supply and the Church is required to pay GST in respect of that supply to the Vendors.
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.
Explanation
A "taxable supply" is defined in subsection 123(1) as a supply made in the course of a commercial activity. A "commercial activity" is defined under the same subsection to include the making of a supply (other than an exempt supply) of real property. Accordingly, supplies of real property made in Canada by way of sale are taxable unless specifically exempted under Part 1 of Schedule V XXXXX.
Subsection 165(1) provides that every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply. Furthermore, subsection 221(1) requires that every person who makes a taxable supply shall collect the tax payable in respect of the supply as agent of Her Majesty. There are some exceptions to the requirement to collect the tax for certain sales of real property whereby the recipient is required to pay the tax directly to the Canada Revenue Agency (CRA). However, these exceptions do not apply in these circumstances.
Based on the facts, the sale of the Property by the Vendors is a taxable supply and there are no exemptions that apply in respect of the supply. As the recipient of the taxable supply, the Church is liable to pay the GST in respect of the purchase of the Property and the Vendors are required to collect the GST in respect of the sale of the Property.
If you require clarification with respect to any of the issues discussed in this letter, please call my colleague, Francine Ménard directly at (613) 957-8222. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Doretta Guoti-Thomas
Rulings Officer
UNCLASSIFIED
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