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.
GST/HST Rulings Directorate
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 244917
Dear [Client]:
Subject: GST/HST RULING
GST/HST implications of constructing a laneway house
Thank you for your correspondence of [mm/dd/yyyy], sent on behalf of your clients who constructed a laneway house to lease to individuals for occupancy as a place of residence. You are requesting confirmation of the application of the goods and services tax/harmonized sales tax (GST/HST) to the activity of constructing the laneway house and whether your clients are entitled to any GST/HST rebates relating to the newly constructed laneway house. We apologize for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. Two individuals, [Individual A] and [Individual B] entered into a joint venture agreement (the Agreement) effective [mm/dd/yyyy] with […][Corporation C] and […][Corporation D] [(the Corporations)] for the purpose of acquiring, holding, developing, redeveloping, renovating, refinancing, managing and the eventual sale of lands and buildings (the Property) described in Schedule A to the Agreement.
2. Schedule A identifies the Property with the civic address of […].
3. You provided a copy of a [provincial government] form […] dated [mm/dd/yyyy] that indicates that [Individual A and Individual B] (the Owners, or, when referring to one of the Owners, the Owner) acquired the Property as joint tenants. The [...] form states that the total consideration and the value of the real property (land, building, fixtures and goodwill) purchased by the Owners was $[…].
4. The Agreement refers to the Owners as the “Investor”. Clause 3 states that the parties (the Venturers) are not partners and nothing in the Agreement nor their conduct shall make them partners or constitute them as agents for the other or impose any fiduciary duty, liability or obligations upon any of them except as set out in the Agreement.
5. Clause [#] states that the Venturers acknowledge and agree that they have an equal interest in the joint venture. We understand this to mean that the parties may have an equal interest in the business and profits earned from the activity of the joint venture and not an equal interest in the Property used in the joint venture. No evidence was provided to show that […][the Corporations] hold any beneficial interest in the Property.
6. Clause [#] states that title to the Property is in the name of the Owners and that the Owners acknowledge that they hold the Property in trust for the joint venture. No trust agreement was provided and therefore, the nature of the trust arrangement between the Owners, [and the Corporations] is unknown.
7. Clause [#] provides that management of the Property is to be agreed in writing between the parties. An addendum to the Agreement, signed on [mm/dd/yyyy], is effective [mm/dd/yyyy] and provides:
- [the Corporations] are identified as Party A; the Owners are identified as Party B.
- The term of the joint venture agreement for the Property is [#] years or extended by mutual agreement.
- The intent of the joint venture is to purchase the legal second suite property, renovate its interior and add a 3rd legal detached dwelling in the rear yard. Once construction is complete, the Property will be refinanced to its new and higher value and all units are to be rented.
- Party A will be responsible for the following with respect to the Property:
o Property maintenance
o Tenant relations
o Bookkeeping
o Emergencies
- Cash flow will be divided between Party A and Party B on a 50% basis and paid out quarterly.
- Party A will charge $[…] plus HST for renovation management, which will be charged to the Property.
8. Clause [#] provides that all profits and losses of the joint venture will be divided equally between the Venturers.
9. Clause [#] and clause [#] provide that the Owners will be responsible for financing the acquisition of the Property including any additional amounts necessary to cover the cost of the acquisition including land transfer tax and legal costs as well as financing all renovations of the Property and [Corporation C] will be responsible for completing the renovations. We understand there is a joint bank account to pay for these costs.
10. The Venturers made no joint venture election under section 273 of the ETA.
11. You advised that the Owners constructed a laneway house on the Property and construction was completed on [mm/dd/yyyy]. [Corporation C] entered into a Tenancy Agreement (TA) with two individuals for lease of the laneway house as a place of residence; the individuals are not related to the Owners. The effective date of the TA is [mm/dd/yyyy] with an end date of [mm/dd/yyyy].
12. The Owners voluntarily registered for GST/HST purposes by telephone on [mm/dd/yyyy] and a GST/HST program account was opened under the Business Number […], effective [mm/dd/yyyy] with […] a [mm/dd] fiscal year end. The Owners requested registration on the assumption that registration was required in order to claim a housing rebate. The GST/HST registration identifies the type of ownership of the business entity as a partnership.
13. The Owners requested to have their GST/HST registration backdated to [mm/dd/yyyy]; this request was denied as the Owners were unable to demonstrate that they were required to be registered.
14. In a telephone conversation on [mm/dd/yyyy], you advised that the Owners have not formed a partnership.
15. The Owners have not claimed any input tax credits relating to the construction of the laneway house.
16. In our telephone conversation of [mm/dd/yyyy], I advised you of rebates that may be available under sections 256.2 and 257 of the ETA and that a two-year limit applies for those rebates. We discussed the requirement under subsection 191(1) to report a self-supply of a laneway house when it is first leased to an individual for occupancy as a place of residence.
17. You have provided a copy of the building permit issued by the City […]on [mm/dd/yyyy] to [Corporation C] to construct a detached second suite and a copy of the drawing list that describes the site plan dated [mm/dd/yyyy] submitted to the City […] for the laneway house. You also provided an itemized list of costs and copies of invoices relating to the laneway house.
RULINGS REQUESTED
You would like a GST/HST ruling to confirm the following:
1. Is the laneway house subject to GST/HST as a result of the lease to the individuals for occupancy as a place of residence?
2. Are the Owners entitled to a GST/HST new housing rebate?
You have also asked for clarification as to whether the Owners required GST/HST registration.
RULINGS GIVEN
1. At the time the Owners leased the laneway house for occupancy as a place of residence, the Owners were deemed under subsection 191(1) to have made and received a taxable supply of the laneway house (this is referred to as a self-supply). The Owners were required to account for the GST/HST based on the fair market value of the laneway house at that time.
2. The Owners are not entitled to a GST/HST new housing rebate. Instead, the Owners may be entitled to a different rebate for new residential rental properties. We discuss eligibility conditions for other rebates in the Additional Information section below.
Clarification with regard to the Owners’ requirement to be registered is provided in the Additional Information section below.
EXPLANATION
Ruling 1
We first set out our understanding of the ownership of the Property and the business relationship between the Venturers.
Ownership of real property
Recognizing who has an interest, including beneficial interest, of real property is significant for GST/HST purposes with respect to who is the builder of a residential complex and for the reporting and remitting of tax on the self-supply of the complex under section 191(1). A person who is a builder may also qualify for a rebate under subsection 256.2(3) for the tax remitted on the self-supply.
Under real property law in common law jurisdictions […], a joint venture cannot hold legal title or beneficial ownership of real property recognized by common law and provincial statute law.
The information provided indicates that the Owners (as joint tenants) are the only persons who have an interest in the Property on which the laneway house is situated. Generally, joint tenants have an identical and undivided interest in real property and therefore, each joint tenant owns the entire property. Where more than one individual holds legal title to real property as a joint tenant, the Canada Revenue Agency (CRA) would consider that each of those individuals has 100% interest in the real property.
The Agreement provides that each Venturer has an equal interest in the joint venture. However, interest in a joint venture does not necessarily equate to an interest in real property that is the subject matter of the joint venture. An interest in a joint venture is not the same as an interest in real property that is held in joint tenancy. Although the Owners acquired the Property subsequent to entering into the Agreement and the purpose of the Agreement refers to acquiring and selling land and buildings, there is no evidence that [the Corporations] have an interest in the Property.
In order to comment on the application of the GST/HST to the activity in question, the relationship of the parties to each other must be determined. Upon reviewing the Agreement, it is not clear whether the construction of the laneway house is truly a joint venture. There are a number of indicia which usually must be present to characterize an enterprise as a joint venture. For example, joint venture participants contribute resources, such as money, property, skills or time for use in the performance of the joint venture activities. There is also joint ownership in the venture subject matter and participants may have one of several types of interests in the underlying assets, including joint tenancy, tenancy in common, joint property, common property or part ownership in the underlying assets.
Under real property law in common law jurisdictions, the fee simple estate can be fragmented into its legal and equitable (or beneficial) interests. The definition of real property in subsection 123(1) includes an interest in real property, whether legal or equitable. Accordingly, the ownership of real property can include a legal or an equitable interest. By severing the estate into its two component interests, one person could lawfully own the beneficial interest in real property while another person could own the legal interest. It is the CRA’s position to consider the entire estate, including the equitable (beneficial) interest in the real property to belong to the person or persons who hold the legal interest unless there is documentation to substantiate that a transfer of beneficial interest has been made to another person.
In this specific case, only the Owners have acquired the Property and hold an interest in the Property. It is not clear that the acquisition of the Property was undertaken in the course of the joint venture activity. It would appear that the acquisition of the Property by the Owners was a preliminary step to their participation in the development of the Property, which includes the construction of the laneway house. Thus, the money paid to acquire the Property may not be a contribution by the Owners to the joint venture activity as they paid money to acquire legal title to the Property. The Owners may then have contributed the Property to the joint venture activity.
We note that a person cannot make a contribution of real property to a joint venture if the person does not have any interest in the property. Generally, joint venture participants may retain title to any property they contribute to be used in the joint venture, unless some of the property is sold to the other participants or was acquired on behalf of the other participants.
There is no evidence that the Owners made a supply of an interest in the Property to [the Corporations]. A statement in the Agreement that the Venturers agree that they all have an equal interest in the joint venture does not substantiate that a supply of real property was made to [the Corporations] As noted in Fact 6 above, the Agreement provides that the Owners hold the Property in trust for the joint venture. However, no trust agreement was provided to indicate that the Owners purchased the Property on behalf of [the Corporations] to indicate that [the Corporations] have any beneficial ownership of the Property. Therefore, we would consider the entire Property, including the beneficial interest, to belong solely to the Owners who hold the legal interest and who own the Property in joint tenancy.
Builder of a residential complex
The term builder is defined in subsection 123(1). Under paragraph (a) a person is the builder of a residential complex if, at a time when the person has an interest in the real property on which the complex is situated, the person carries on or engages another person to carry on for the person, the construction or substantial renovation of the complex. A person is considered to have engaged another person to carry on for the person the construction or substantial renovation of the complex where the person has, in their own right, the control or authority to obtain or contract with another person for this purpose.
The term residential complex is defined in subsection 123(1) to include a building in which residential units are located together with any common areas and other appurtenances to the building and land immediately contiguous to the building that is reasonably necessary for the use and enjoyment of the building as a place of residence for individuals. A residential unit is defined to include a detached house that is occupied by an individual as a place of residence.
GST/HST Info Sheet GI-168, The GST/HST Implications of the Construction of Secondary Housing Units (Laneway Housing) explains the GST/HST obligations and entitlements of individuals who construct a laneway house on their land. A laneway house is generally described as a detached secondary house built on a pre-existing lot. For GST/HST purposes, a laneway house is a single unit residential complex that is a separate, detached housing unit constructed on the same parcel of land as another residential complex.
A person who constructs or substantially renovates a residential complex for the primary purpose of leasing the complex in the course of a business is generally considered to be a builder of the complex for GST/HST purposes. A person is also a builder of a residential complex if the person hires someone to construct or to substantially renovate the complex for the primary purpose of leasing the complex in the course of a business.
The information provided indicates that the Owners are the only persons who have an interest in the Property on which the laneway house is situated. Further, the laneway house was constructed for the purpose of making a supply of a long-term residential lease, which is exempt under paragraph 6(a) of Part I of Schedule V.
As indicated above, it is not clear whether the construction of the laneway house is a joint venture. Other indicia which usually must be present to characterize an enterprise as a joint venture include a right of mutual control or management of the enterprise by all the participants. In the present case, the details regarding management of the enterprise do not set out any rights of mutual control or management by all of the participants. The management fee paid to [Corporation C] is consideration for a taxable supply and as indicated in the addendum to the Agreement, HST applies to this supply.
While there is a provision for sharing profits and losses equally, the basis for profits and losses is not identified. Governance of the joint venture is not explained, such as how business decisions will be made. The Agreement sets out that financial contributions in respect of the Property, which we understand includes the construction of the laneway house, are made only by the Owners.
Further, it is not clear whether the terms of the Agreement provide that the Owners built the laneway house or engaged [Corporation C] to construct it. The Agreement has the characteristics of construction management and ongoing property management services whereby [Corporation C] managed the construction of the laneway house and provides ongoing property maintenance including tenant relations and other services to the Owners. The information suggests that [Corporation C] is making taxable supplies of services to the Owners by constructing the laneway house on the Owners’ land. For example, the addendum provides that [the Corporations] will charge $[…] plus HST for renovation management to the Property. We understand this to mean that the charge will be made to the Owners of the Property.
As the sole legal owners of the real property on which the laneway house is situated, the Owners are the persons making a supply of the laneway house by way of lease to the tenant. [Corporation C] does not make a supply of the laneway house because it has no interest in the real property on which the laneway house is situated.
When real property held in joint tenancy is supplied by way of sale, or by way of lease, licence or similar arrangement, the supply is a single supply made by all of the joint tenants because each has 100% interest in the property. In turn, a payment of consideration and tax made by the recipient of a supply of real property that is held in joint tenancy is a payment made to all of the joint tenants.
Accordingly, only the Owners are builders of the laneway house for purposes of the GST/HST.
Self-supply under subsection 191
Under subsection 191(1), when a builder constructs or substantially renovates a single unit residential complex (such as a laneway house) and subsequently supplies the complex by way of lease, licence or similar arrangement for purposes of its occupancy as a place of residence by an individual, the builder is deemed to have made and received a taxable supply of the complex (referred to as a self-supply). The builder is deemed to have paid as a recipient and to have collected as a supplier tax in respect of the supply calculated on the fair market value of the complex at the later of the time when the construction or substantial renovation is completed and the time when possession of the complex is given for occupancy to an individual as a place of residence. The self-supply applies whether the builder is registered for GST/HST or not.
A builder of a residential complex will report the GST/HST deemed to have been collected calculated on the fair market value of the newly constructed residential complex on a GST/HST return and will remit the tax owing to the CRA. A builder that is a GST/HST registrant will report and remit the tax due on the self-supply with their regular return. A builder that is not a GST/HST registrant must report and remit the tax due on the self-supply by filing the non-personalized return, Form GST62, Goods and Services Tax/Harmonized Sales Tax Return (Non-Personalized).
The self-supply rule in subsection 191(1) does not provide for the division of the tax payable on the deemed supply among multiple builders who own the residential complex in joint tenancy. The supply deemed to have been made is that of the residential complex and not of an interest in the complex.
In the current situation, the residential complex is the laneway house, including the land necessary for the use and enjoyment of the laneway house. The GST/HST is required to be collected and remitted to the CRA calculated on the fair market value of the laneway house, which would include the land that is reasonably necessary for the use of the laneway house as a place of residence.
In light of the common-law principles that apply in respect of real property that is held in joint tenancy, both of the Owners, as joint tenants of the Property, are builders of the laneway house for GST/HST purposes and both Owners would be deemed as having made a self-supply of the laneway house under subsection 191(1). Therefore, each Owner is deemed to have paid as a recipient and to have collected as a supplier tax in respect of the deemed supply calculated on the fair market value of the laneway house at the later of the time when the construction is substantially completed and the time when possession of the house is given for occupancy to an individual as a place of residence.
Further, subsection 222(1) deems both Owners to hold the amounts deemed to have been collected as or on account of tax in trust for the Crown until the amounts are remitted to the Receiver General or withdrawn as an input tax credit or net tax deduction under subsection 222(2). Therefore, each Owner is jointly and severally liable for the GST/HST remittable on the self-supply of the laneway house.
However, where one joint tenant accounts for amounts collected as or on account of tax in respect of a self-supply made under subsection 191(1), the accounting of the amount and the remittance of any resulting positive amount of net tax by that joint tenant will discharge the liability of the other joint tenants.
Therefore, only one of the Owners is required to report and remit the GST/HST deemed to have been collected calculated on the fair market value of the newly constructed laneway house on [mm/dd/yyyy], which we understand is the later of the time when the construction was completed and the time when possession of the laneway house was given for occupancy to an individual as a place of residence.
Ordinarily, amounts collected by a non-registrant as or on account of tax are to be reported on GST/HST returns, each reflecting the amounts collected during a particular calendar month. A non-registrant is required to file its returns and remit the net tax by the end of the month following the month in which the tax was collected.
Since neither of the Owners were GST/HST registrants on [mm/dd/yyyy], whichever one of the Owners that chooses to report and remit the tax on the deemed supply must do so on Form GST62, a non-personalized GST/HST return. That Owner was required to account for the tax on the deemed supply calculated on the fair market value of the laneway house by reporting the tax deemed collected on Form GST62 and remitting the amount by the end of the month following the month during which the self-supply occurred, which in this case was [mm/dd/yyyy].
Ruling 2
The GST/HST new housing rebate under section 256 may apply where an individual constructs or substantially renovates his or her own primary place of residence or the primary place of residence of a relation of the individual, or who hires another person to do so. As the Owners have constructed a laneway house that was leased to an unrelated person, they are not entitled to this rebate.
We will address two other rebates that may be available to the Owners in respect of the construction and self-supply of the laneway house in the Additional Information section below:
- Where a person is a non-registrant for GST/HST purposes and makes a taxable sale of real property, the person may be eligible for a rebate under section 257 for the GST/HST the person has paid for the construction costs of the residential complex.
- A builder who was required to report a deemed supply of a residential complex under subsection 191(1) may be eligible to claim a GST/HST new residential rental property rebate (NRRPR) under subsection 256.2(3) for a portion of the GST or the federal part of the HST the builder was deemed to have paid as a recipient. A person who qualifies for an NRRPR may be able to claim an Ontario NRRPR for a portion of the provincial part of the HST if the subject property is situated in Ontario.
As outlined in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Services, a GST/HST Ruling is a written statement the CRA provides to a taxpayer that sets out the CRA’s position on how the relevant provisions of the ETA apply to a clearly defined fact situation of the taxpayer. The CRA will issue a ruling only when all of the relevant facts of a transaction or series of transactions together with supporting documents are provided.
We are unable to issue a ruling as to whether the Owners are eligible for a rebate under section 257 or under subsection 256.2(3) as the eligibility for these rebates depends on a number of specific conditions being met which cannot be verified and because there are unknown factors with respect to the ownership of the Property and the joint venture arrangement for the construction of the laneway house. For example, one of the conditions for the rebate eligibility involves a determination of whether there is a principal/agency relationship between the Owners and [Corporation C].
Non-registrant’s sale of real property (section 257 rebate)
Where a person is a non-registrant for GST/HST purposes and makes a taxable supply of real property by way of sale, which includes where the person is required to report a self-supply of a residential complex under subsection 191(1), the person may be eligible for a rebate of all or part of the GST/HST paid by the person on the last acquisition of the real property plus the GST/HST paid on improvements made to the property. The rebate is equal to the lesser of the basic tax content of the real property at the time of the sale and the GST/HST payable in respect of the sale.
The term basic tax content is defined in subsection 123(1). In general, the basic tax content of a property of a person is the tax payable by the person on the last acquisition of the property, plus any tax payable on any subsequent improvements made by the person to the property (e.g., the construction of the laneway house), less rebates (but not input tax credits) the person was entitled to claim, minus an adjustment for the depreciation, if any, in the fair market value of the property since the property was last acquired. Pursuant to subsection 123(1), improvement, in respect of property of a person, means any property or service supplied to, or goods imported by, the person for the purpose of improving the property, to the extent that the consideration paid or payable by the person for the property or service or the value of the goods is, or would be if the person were a taxpayer under the Income Tax Act, included in determining the cost or, in the case of property that is capital property of the person, the adjusted cost base to the person of the property for the purposes of the Income Tax Act.
Information on the calculation of the basic tax content as it relates to the rebate under section 257 is included in GST/HST Memorandum 19.3.6, Rebate on Non-registrant's Sale of Real Property. To claim a rebate under section 257, a person must complete Form GST189 – General Application for Rebate of GST/HST (GST189), using Reason Code 7. Step-by-step instructions on how to complete the rebate form are provided in the guide RC4033, GST/HST General Rebate Application.
When [Corporation C] purchases goods or services or makes supplies as part of the construction and leasing of the laneway house, it is not clear whether [Corporation C] is acting in the capacity of:
- agent of the Owners, or
- making a supply of construction services to the Owners.
We note that the Agreement sets out the relationship between the Venturers and states that their conduct shall not constitute them as agents for the other or impose any fiduciary duty, liability or obligations upon any of them and that all Venturers have an equal interest in the Property. However, while a written agreement may state that a person is not an agent, such a statement is not conclusive in itself as to whether or not an agency relationship has been established for a specific purpose. Whether a person is acting as agent in entering into a particular transaction on behalf of another person is not always clear.
GST/HST Policy Statement P-182R, Agency, and GST/HST Info Sheet GI-012, Agents, discuss the essential qualities of agency. P-182R notes that the absence of an agency agreement is not sufficient to conclude that an agency relationship does not exist and case law supports the possibility that two parties may be engaged in an agency relationship provided their actions indicate that one party is acting as agent on behalf of another.
However, it could be the case that the Owners hired [Corporation C] to construct the laneway house as the Agreement has characteristics of construction management and ongoing property management by [Corporation C] including ongoing property maintenance, tenant relations and other services to be provided to the Owners in respect of the laneway house.
Generally, if a co-venturer of a joint venture purchases property or services otherwise than as agent on behalf of the other joint venture participants, the co-venturer may be considered to be making a supply of the property or services to the other co-venturers. If the other joint venture participants subsequently reimburse the co-venturer for all or part of the purchase, the reimbursement is regarded as part of the consideration for the supply of services made by the co-venturer to the participants and is subject to GST/HST.
Where the existence of an agency relationship is a factor in reviewing a rebate claim, the rebate claim may be subject to review by the CRA. Therefore, it may be necessary to review the conduct of the parties relating to the construction of the laneway house to determine whether their conduct supports an agency relationship. Alternatively, the review may find that the Owners engaged [Corporation C] to carry on the construction of the laneway house.
If the Owners (as joint tenants) are eligible for a rebate under section 257, only the Owner who reported the self-supply is entitled to claim the rebate. Since that Owner owns an undivided interest in the entire Property, which includes the laneway house, the rebate would be in respect of the tax payable on the entire laneway house; a section 257 rebate can only be claimed once.
Subsection 257(2) provides that a rebate claim under section 257 may only be made by the person who made the particular taxable supply of real property by way of sale, which includes a deemed supply of a residential complex under subsection 191(1), and the CRA is only authorized to pay a rebate to that person. Section 67 of the Financial Administration Act does not permit another person to either make a claim for, or be paid, a rebate. Therefore, [Corporation C] could not submit a claim for a rebate under section 257 in respect of a deemed supply of the laneway house made by the Owners.
A rebate under section 257 shall not be paid to a person unless the person files an application for the rebate within two years after the day the consideration for the supply of the real property became due or was paid without having become due. In this specific situation, if there is eligibility for the rebate under section 257, the application must be filed before [mm/dd/yyyy]. A rebate is not available for expenses incurred after the deemed supply, that is, expenses incurred after [mm/dd/yyyy].
New residential rental property rebate (subsection 256.2(3) rebate)
A builder who is subject to a self-supply under subsection 191(1) may qualify for a new residential rental property rebate (NRRPR) under subsection 256.2(3) for a portion of the federal part of the HST that was remitted on the self-supply. A person who qualifies for an NRRPR may be able to claim […] a portion of the provincial part of the HST if the subject property is situated in [the that province].
Subsection 256.2(3) sets out the requisite conditions for the NRRPR in respect of a portion of the GST/HST paid by a person. […].
A builder will apply for the NRRPR using the prescribed form, GST524, GST/HST New Residential Rental Property Rebate Application for a residential unit that is leased under a long-term lease to an individual for use as a primary place of residence. […].
In a situation involving two or more builders who own a residential complex as joint tenants, as noted above, once one of the joint tenants has reported and remitted the GST/HST deemed to have been collected as a supplier and paid as a recipient of the self-supply of the residential complex under subsection 191(1), the other joint tenants are relieved of this liability. Therefore, the other joint tenants would not be eligible for an NRRPR.
Where the NRRPR is based on the amount of tax imposed under subsection 191(1), paragraph 256.2(7)(c) requires that in order to be eligible for this rebate, Form GST524 […] must reflect the amount the person reported on a return for the reporting period in which the person was deemed to have collected tax and that the person has remitted all tax remittable as reported in that return.
A person who is a builder of a residential complex must file Form GST524 […] within two years after the end of the month in which the tax became payable on the self-supply. In this specific situation, if there is eligibility for the rebate under subsection 256.2(3) in respect of a self-supply under subsection 191(1), the application forms must be filed before [mm/dd/yyyy].
Filing the rebate applications
A person may be able to include the rebate under section 257 and the NRRPR rebate under subsection 256.2(3) on their GST/HST return, which would include a GST62 return. In this case, the person would enter the total amount of the rebates on line 111 of the GST62 return. If the person files the GST189 and the GST524 forms together with the GST62 return, subsection 228(6) provides that the person will only be required to remit the difference between the tax owing, if any, on the deemed supply and the amount of the rebates.
The filing of a return is a self-reported document and is subject to verification. Generally, interest may be charged on any overdue balance owing on a GST/HST return and any other overdue GST/HST amounts that are remittable to the Receiver General.
GST/HST registration
The Owners voluntarily registered for GST/HST purposes and have an effective date of [mm/dd/yyyy]. In our telephone conversation of [mm/dd/yyyy], I confirmed that there is no requirement for the Owners to be registered for GST/HST in order to claim rebates and to report a self-supply under subsection 191(1).
Whether a partnership exists must be determined according to the law governing partnerships that applies in the relevant province or territory, […].
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-296-2530. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Susan Eastman
Industry Sector Specialist
Real Property
Legislative Policy and Regulatory Affairs
GST/HST Rulings Directorate
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