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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 62030
August 29, 2011
Dear [Client]:
Subject:
GST/HST RULING
Annual lease of trailer park site
This is in reply to your letter concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the rental of a site at a trailer park (the Park) operating as [...] ("[the Resort]") in [...] [City 1, Participating Province X], and the pro-rated portion of municipal property taxes charged to you by [the Resort] with respect to your unit. We apologize for the delay in responding.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Based on the information provided in your letter and recent telephone discussions myself and M. Mercer of this office, we understand the following:
Statement of Facts
1. In [mm/yyyy] you purchased a trailer situated on a leased site at the Park as your permanent place of residence. The [Resort] leases seasonal and year-round, permanent, sites at the Park. There are approximately [...] sites, [...] of which are located in the permanent section of the Park and leased to long-term residents year-round. You occupy a site in that section of the Park designated for permanent, year-round residents.
2. The trailer is a [...], [...]' x [...]', with two [...]'x [...]' tip-outs. A [...]' x [...]' room addition has been constructed and attached to the trailer and is permanently affixed to a cement pad. The wheels have been removed from the trailer and the unit is fully skirted. An [...]' porch is attached to the trailer and extends across the front. The trailer is vinyl sided and insulated, and the roof extends over the addition. There is also an attached, insulated, work shed at the rear.
3. You indicated that it is not possible to move the trailer from the site since the room addition has been constructed and permanently affixed to the cement pad. The unit is immobile. It can only be removed from the site by tearing down the permanent addition and re-installing the wheels. You indicate this would involve significant work and estimate the cost of such removal to be within the range of $[...] to $[...].
4. You have approximately [...] square feet of living area, consisting of one bedroom, living room, cooking facilities, a full bathroom with tub and shower, as well as washer and dryer. The unit is heated and you have air conditioning.
5. Hydro, water and sewer facilities are permanently connected and available year-round. You have mail delivery and a telephone listing at the site.
6. The roads in the Park are ploughed during the winter. Access to the permanent sites in the Park is available year-round. There are no restrictions on the long-term residents' year-round use of the Park.
7. The unit is fully furnished by you and used as a place of residence since you purchased the unit in [yyyy].
8. You indicate that you were charged and paid GST on the site lease until the Park was sold to the current owner in [yyyy]. The previous owner of the Park provided detailed monthly invoices which showed the GST separately. The current owner does not reflect the GST/HST on the invoicing for the site rental.
Ruling Requested
You would like to know whether the site rental and the additional amount charged to you by [the Resort] for your share of municipal property taxes assessed in respect of your unit are subject to GST/HST.
Ruling Given
Based on the facts set out above, we rule that the amount charged for the rental of the land, including the additional amount charged to you by the [Resort] for your share of the municipal taxes assessed in respect of your unit is consideration for a supply of land that is exempt of the GST/HST under subparagraph 7(a)(i) of Part I of Schedule V to the ETA.
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
Subparagraph 7(a)(i) of Part I of Schedule V to the ETA provides that a supply of land (other than a site in a residential trailer park) made by way of lease, licence or similar arrangement that provides for continuous possession or use of the land for at least one month is exempt if the supply is made to an owner, lessee or person in occupation or possession of a residential unit that is or is to be affixed to the land for the purpose of its use and enjoyment as a place of residence for individuals.
Subsection 123(1) defines the term "residential unit" to include a house, semi-detached house, mobile home or "any other similar premises". Whether a particular unit has the same permanent residential characteristics as a house such that it is considered to be a "residential unit", is affixed to the land, and is used as a place of residence for individuals is determined on a case-by-case basis taking into consideration the facts and circumstances of the particular case.
Based on the facts referred to above, the trailer is affixed to the land in a manner conducive to long-term residential use and is sufficiently modified to add the necessary characteristics, including permanency, such that the trailer is considered to be a similar premises for purposes of the definition of "residential unit". The trailer is connected year-round in a permanent manner to service facilities including hydro, water, and telephone services. As such, the trailer is considered to be a residential unit that is affixed to the land. Given that you have been using the trailer as a place of residence since the time of purchase in [yyyy], the requirements under subparagraph 7(a)(i) of Part I of Schedule V to the ETA are met.
Additional Rent - property taxes
Property taxes paid by a property owner to the municipality are generally not subject to GST/HST. The property owner generally includes an amount that represents a recovery of such taxes from the lessee either as part of the basic rent or as an additional rent. Where a separate amount is paid by a lessee on account of property taxes assessed against the property owner, this amount is part of the consideration for the rental of the property, even if the lessee pays the amount directly to the municipality. As such, the amount will take on the same tax status as the rent. In this case, since the rental of the land on which the residential unit is situated is exempt of GST/HST, any additional amount charged to you for your share of the municipal property taxes assessed in respect of your unit is not subject to GST/HST.
Tax paid in error
Under the ETA, where a person has paid an amount as or on account of tax that was not payable, the person may request a refund or credit of the amount from the supplier. A supplier may refund or credit the tax within two years after the day the amount was charged or collected. Further information on the time limitations and conditions for claiming refunds and credits is available in GST/HST Memoranda Series Chapter 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act, available on the CRA Web site.
Where a refund or credit is not issued by the supplier, the person may make an application under subsection 261(1) for a rebate of the tax paid in error by completing and submitting application form GST 189, General Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST), a copy of which is included. It should be noted that a rebate application made under section 261 cannot include amounts that were paid in error more than two years before the application is filed. Given the circumstances in this case, June, 2005 (the date we received your ruling request) will serve as the date for purposes of the two-year time limitation under section 261.
Please complete the attached rebate application and send a copy of this ruling, along with the completed rebate application and all of the original invoices issued to you in respect of your site rental at [the Resort] in which GST/HST was charged and that you paid, to the following address:
Summerside Tax Centre
Attention: [...]
Rebates Division
275 Pope Side Road
Summerside, PE C1N 5Z7
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9212. 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,
Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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