13 December 2004 GST/HST Interpretation 53743 - Will the Canada Revenue Agency ("CRA") consider a rebate to have been filed where photocopied invoices are submitted with the rebate rather than original invoices?

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.

Dear XXXXX:

Thank you for your letters XXXXX (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of vacant land.

Statement of Facts

Our understanding of the facts, the transactions, and the purpose of the transactions is as follows:

1. In XXXXX, "A" was the owner in fee simple of a parcel of land (the subject property) situated in the province of XXXXX.

2. On XXXXX, Mr. "A" registered a deed XXXXX in respect of the subject property. The documents provided show the following information:

•   A survey XXXXX shows that the subject property was divided into XXXXX parts XXXXX.

•   Parts XXXXX and XXXXX were granted to "D" in fee simple, for nominal consideration.

•   Parts XXXXX and XXXXX were granted to "B" "In trust", "To uses", for nominal consideration.

•   Part XXXXX was granted to "F" "In trust", "To uses", for nominal consideration.

•   The deed was also signed by "E" (the XXXXX of "A") stating that XXXXX hereby bars XXXXX dower in the lands.

3. Based on information you have provided, Parts XXXXX and XXXXX were held by "B" as a bare trustee in trust for "A" until registered title was transferred to "C" who became the new bare trustee also in trust for "A".

•   A trust agreement XXXXX states that "B" holds the lands as set out in XXXXX in trust for "A" and not as beneficial owner and will on the written direction of "A" transfer the said lands, as so directed.

•   An agreement made XXXXX between "C" (as the New Trustee) and "A" (as the Beneficial Owner) provides that "C" agrees to receive from "B" Parts XXXXX and XXXXX in XXXXX name and agrees to hold them as simple bare trust for "A".

•   In XXXXX, "B" transferred Parts XXXXX and XXXXX to "C" (for no consideration or for nominal consideration).

4. A trust agreement XXXXX states that "D" holds the lands as set out in XXXXX in trust for "A" and not as beneficial owner and will on the written direction of "A" transfer the said lands, as so directed.

5. "A" did not apply for severance or file a plan of subdivision in respect of the subject property. You have stated that the division of the subject property took place by the registration of the deed as a simultaneous conveyance of the XXXXX parts in XXXXX and that this was in compliance with the Planning Act XXXXX, as it existed at that time.

6. "E" is the XXXXX of "D" and the XXXXX of "C".

7. "B" and "F" were solicitors at the time the deed was registered. It is our understanding that "B" is not related to "A" or to "C".

Transaction

In XXXXX, "C" sold Part XXXXX to an unrelated person.

Ruling Requested

The supply of Part XXXXX is exempt pursuant to subsection 9(2) of Part I of Schedule V to the Excise Tax Act (ETA).

Ruling Given

Based on the facts set out above, we rule that the supply of Part XXXXX is subject to GST.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

You have stated that the division of the subject property took place by the registration of the deed made in XXXXX by "A" and that this was in compliance with the Planning Act XXXXX, as it existed at that time. Therefore, for the purposes of paragraph 9(2)(c) of Part I of Schedule V to the ETA, the subject property is considered to have been subdivided or severed by "A" in XXXXX into XXXXX parts.

Based on information you have provided, Parts XXXXX and XXXXX were held successively by "B" and by "C" as bare trustees in trust for "A". At all times, "A" was the beneficial owner of Part XXXXX. For GST/HST purposes, the Canada Revenue Agency (CRA) does not consider a bare trustee to be the owner of the trust property. In this case, it is "A" that would be considered to be the owner and to be involved in the commercial activities relating to the trust properties. Therefore, it is "A" who is considered to be the supplier of Part XXXXX for GST/HST purposes. Please find attached GST/HST Technical Information Bulletin B-068: Bare Trusts, which explains the CRA's policy with respect to the treatment of bare trusts under the ETA.

Since the subject property was subdivided or severed into XXXXX parts by "A" and that "A" has always been the beneficial owner of Part XXXXX from the time of subdivision or severance of the subject property, the supply of Part XXXXX is excluded from the general exemption of subsection 9(2) by virtue of paragraph 9(2)(c) of Part I of Schedule V to the ETA. Based on the facts set out above, there is no other provision in the ETA that would exempt this supply and the supply is therefore subject to GST.

Please note that this ruling applies to the supply of Part XXXXX only and does not apply to the subsequent sales of any of the other properties set out in XXXXX.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9587.

Yours truly,

B. Mulinda
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2004/12/02 — RITS 53780 — Tax Status of Supplies Provided by a Charity