16 October 2001 GST/HST Ruling 35621 - Sale of Real Property

Dear XXXXX:

Thank you for your letter of March 26, 2001, (with attachments), concerning two Goods and Services Tax (GST)/Harmonized Sales Tax (HST) interpretations issued by the XXXXX Tax Services Office XXXXX[.]

Statement of Facts

Our understanding of the facts and transactions is as follows:

1. On XXXXX XXXXX, purchased two parcels of vacant land from a non-GST/HST registrant, XXXXX (the Vendor). The lots are legally described as XXXXX.

2. The Vendor was a partner in a partnership known XXXXX (the Partnership). The Partnership had acquired XXXXX of the above referenced real property in XXXXX. XXXXX was subdivided in or around XXXXX, which subdivision included the creation of lots XXXXX.

3. In the XXXXX left the Partnership, such that by XXXXX, the Vendor and one other individual were the only remaining partners in the Partnership.

4. At some time in the XXXXX, the Partnership was dissolved. Upon dissolution of the Partnership and as a result of XXXXX order issued by the XXXXX, the Vendor obtained sole ownership of lots XXXXX and the other partner obtained sole ownership of other lots that had been held by the Partnership. All other lots created as a result of the subdivision of XXXXX had been supplied by the Partnership.

5. The Vendor, an individual, is now selling the lots. Throughout the time the Vendor had sole ownership of lots XXXXX, he and his family used the properties for personal recreation purposes. Since acquiring sole ownership of the lots

(a) the Vendor did not use the properties in a business which he carried on,

(b) the lots were not sold in the course of a business of the Vendor,

(c) the Vendor has not filed an election under section 9 of Part I of Schedule V to the Excise Tax Act, and

(d) the lots have not been further subdivided or severed from other real property by the Vendor.

Ruling Requested

You are requesting confirmation that the sale of lots XXXXX, whose complete legal description appears above, is exempt from the GST.

Ruling Given

Based on the facts set out above, we rule that the sale of these lots from the Vendor to XXXXX is exempt from the GST/HST pursuant to section 9 of Part I of Schedule V to the Excise Tax Act.

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 transactions for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4393.

Yours truly,

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