22 February 2007 GST/HST Ruling 83508 - Requirement to collect GST on a membership fee for XXXXX

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 facsimiles XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your purchase of a modular home. The XXXXX GST/HST Rulings Centre has forwarded your request to us for response.

All legislative references are to the Excise Tax Act (ETA) and the regulations there under.

Statement of Facts

We understand the following:

1. XXXXX you entered into a written purchase and sale agreement with XXXXX ("the Vendor") for a modular home ("the Modular Home") and related services (collectively, with the Modular Home, "the Complex"). The terms of the purchase and sale agreement are set out in the following documents:

(a) the Agreement of Purchase and Sale and appendices XXXXX thereto; and

(b) XXXXX change orders XXXXX.

2. Under the Agreement of Purchase and Sale, the Vendor was to construct (including all material and labour) the foundation, the Modular Home, an entrance room and a garage. The Modular Home consists of three-dimensional modules with three walls and a roof/ceiling. The modules were in as finished a condition as possible prior to leaving the Vendor's premises, taking into consideration that they had to be transported.

3. The Modular Home was affixed to land that you already owned. The land is not situated in a "residential trailer park" as that term is defined in the ETA.

4. The modules were delivered to your site and set on the foundation XXXXX. On that same date, you paid the amounts payable under the Agreement of Purchase and Sale including the XXXXX change orders, less deposits you paid before that date.

5. XXXXX Appendix XXXXX to the Agreement of Purchase and Sale provides that, XXXXX. There was no indication in any of the documents provided that ownership of the Modular Home would transfer at any time other than the time contemplated above. XXXXX the same appendix provides that any changes to the Agreement of Purchase and Sale must be made through a written and signed change order prior to payment of the balance that is due on delivery.

6. The Certificate of Completion and Possession indicates that possession of the Complex was transferred to you XXXXX.

Ruling Requested

You would like to know whether you are entitled to a GST/HST transitional rebate with respect to your purchase of the Complex.

Ruling Given

Based on the facts set out above, we rule that you are not entitled to the GST/HST transitional rebate with respect to the acquisition of the Complex.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is 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

Under policy statement P-223, The Meaning Of "Manufacture And Assembly Of Which Is Completed Or Substantially Completed" In The Definition Of "Mobile Home", ^[xxvi]footnote 1 we consider the Modular Home to be a mobile home for purposes of the ETA. As such, and given the circumstances of this case, the Modular Home is also considered to be a residential complex for purposes of the ETA. We also consider the Vendor to be making a single supply of the Complex to you.

Under the ETA, where a written agreement of purchase and sale for a residential complex was entered into before May 3, 2006, GST at 7% applies to the sale of the residential complex. As the home you purchased is a residential complex and the written agreement of purchase and sale was entered into on XXXXX, GST at 7% properly applied to your purchase of the Complex.

Among the conditions that must be met in order for you to be eligible for a transitional rebate in the circumstances described is that ownership of the Complex must have transferred to you on or after July 1, 2006. Based on the Agreement of Purchase and Sale and the change orders thereto, the evidence indicates that ownership of the Complex transferred to you on XXXXX, the date on which the Modular Home was placed and attached to the foundation and the amounts due under the Agreement of Purchase and Sale were paid. As such, ownership of the Complex transferred to you before July 1, 2006, and you are not eligible for the GST/HST transitional rebate.

Although you indicated that you paid an additional amount to the Vendor on XXXXX, it is our view that this amount was not paid under the terms of the Agreement of Purchase and Sale. The additional amount is not included in the Agreement of Purchase and Sale and is not included in a signed change order made prior to the payment of the balance that is due on delivery. As a result, the date that this additional amount was paid does not have an impact on when ownership was transferred to you pursuant to the Agreement of Purchase and Sale.

Additional Information

You may be eligible for a GST/HST new housing rebate with respect to the acquisition of the Complex. The eligibility criteria for that rebate are set out in the enclosed guide RC4028, GST/HST New Housing Rebate.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-4393.

Yours truly,

Hugh Dorward
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2007/01/17 — RITS 83892 — Foreign Currency Exchange Rates