CRA indicates that an operator with a co-ownership interest in JV lands for condo development could credit the new housing rebate to purchasers

Two affiliated companies (Companies X and Y) contributed lands (held by a nominee through a bare trust agreement) to a joint venture with an unrelated company (Company Z – whose contribution was financing and condo development and marketing) for the development, construction and sale of condominium units. Company X, who was designated as the JV operator, entered into contracts on behalf of the participants with the construction and other suppliers, operated the JV bank account and, together with the nominee, entered into agreements with individuals for sales of the condo units.

CRA indicated that:

  • As Company X had an interest in the JV lands and was entitled to a proportionate share of the JV profits, it qualified as a JV “participant” and, therefore, was eligible to elect to be the JV “operator” and, as such, could make supplies on behalf of the other participants and claim ITCs on eligible expenses incurred by it on behalf of the participants.
  • Where Company X, as operator, made supplies of the condo units on behalf of the participants during the currency of the election, it would be deemed to have made the supply of the units, so that the other participants would not be required to collect the tax on the condo sales.
  • Given that Company X had an ownership interest in the lands and, as operator, engaged suppliers to construct the units, it qualified as a “builder” of the units.
  • As a builder, “provided that the purchasers of the Units meet all the eligibility criteria for the New Housing Rebates, and provided that all of the other conditions set out in subsection 254(4) and subsection 41(6) of the Regulations are met, Company X may pay or credit the New Housing Rebates to purchasers of the Units.”

Neal Armstrong. Summaries of 10 May 2022 GST/HST Interpretation 234662 under ETA s. 273(1), s. 123(1) – builder – (a) and s. 254(4).