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.
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 111118r
Attention: XXXXX
September 9, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Revised interpretation Case Number 111118
Further to our letter of December 23, 2009, case number 111118, we wish revise one aspect of our response. Specifically, this revised interpretation applies in respect of a subsequent sale of the residential complex.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Our understanding, as set out in the letter of December 23, 2009, remains the same. With respect to the issue at hand, Corporation 1 constructed a residential complex and reported tax on a self-supply of the residential complex. Subsequently, two separate additions were made to the residential complex. Corporation 1 was not required to report tax on a self-supply of either of the additions provided that Corporation 1 did not file an election under section 236.4.
Original Interpretation
In our response for Interpretation 1 (see page 10, under the sub-heading "Election under section 236.4", second paragraph, last sentence), we stated that if the election under section 236.4 is not filed, a subsequent sale of the residential complex, including both additions, would generally be subject to tax.
Revised Interpretation
Subsection 136(3) provides that where a builder makes a supply by way of sale of a residential complex that, but for that subsection, would be a taxable supply and but for the construction of an addition, would be an exempt supply under section 5 of Part I of Schedule V to the ETA, the addition and the remainder of the complex are deemed to be separate properties and the sale of the addition is deemed to be a separate supply from the sale of the remainder of the complex and neither supply is incidental to the other.
As it applies to Interpretation 1, the result of the foregoing is that the supply by way of sale of each addition, as a supply separate from that of the rest of the residential complex, would generally be subject to tax while the sale of the remainder of the residential complex would generally be exempt under section 5 of Part I of Schedule V to the ETA.
We regret any inconvenience this oversight in our initial interpretation may have caused.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
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
UNCLASSIFIED
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