Table of Contents

See Also

Athabasca University v. The Queen, 2016 TCC 252

University purchased books for educational supply rather than a transfer of their ownership to students

Athabasca University, which provided online courses to its students and delivered printed books to them without any additional charge, was entitled to a GST rebate on its purchases of the books provided that it could be considered, as required by ETA s. 259.1(2) to have acquired the Books “otherwise than for the purpose of supply by way of sale.” Lyons J applied the single supply doctrine to find that, as the University was making a single supply of education (a service) to its students, it should be considered to have acquired the books for this “ultimate” purpose rather than for the purpose of merely transferring their ownership to the students.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 259.1 - Subsection 259.1(2) University’s purpose in acquiring books for its students was their education rather than the (free) “sale” of the books to them 277
Tax Topics - Statutory Interpretation - Technical Notes Explanatory Notes not followed 120

Administrative Policy

28 February 2019 CBA Roundtable, Q.27

"sale" by builder where it directed transfer of title to purchaser

ETA s. 254(4)(a) and the Ontario equivalent required that in order for a taxable supply by a builder of a new house or condo unit to generate the new housing rebate, there must inter alia be a “sale” of the home to the purchaser. CRA considers that in this context, “the word ‘ownership’ generally refers to the legal ownership (that is, ‘titled’ ownership in the case of the underlying real property), rather than equitable ownership of the property.”

However, CRA commented favourably on a situation where legal title bypassed the builder. A developer, which was the full legal owner of land, agreed with a builder that the builder would both build new homes and condo units on the land and enter into agreements to sell those houses or units to the individual purchasers. At closing (and registration of the condo units), beneficial ownership of the built lots or units would be transferred from the developer to the builder and, moments later (on the “Subsequent Closing”), from the builder to the individual purchaser. However, at the direction of the builder, registered title was transferred directly from the developer to the individual purchaser.

After indicating that “one could argue that the Developer holds legal ownership for the benefit of the Builder and is required to transfer legal ownership … to any third party at the Builder’s request (for example, to the Home Buyer …),” CRA stated:

[P]rovided that legal ownership is transferred from the Developer, at the Builder’s direction at Subsequent Closing, to the Home Buyer who is the particular individual with whom the Builder has entered into the Home Buyer Agreement, the CRA will … regard the Builder as having transferred ownership of the House or Unit … to the Home Buyer … .

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(4) - Paragraph 254(4)(a) legal title can pass directly from the developer to the builder’s individual purchaser 557

22 August 2013 Interpretation 150985

assigment of subleasehold interest is sale of real property

Before going on to find that the assignment by an individual of a sub-leasehold interest in a recreational vehicle site would be exempt under Sched. V, Pt. I, s. 9(2) as a supply by way of sale of real property if the site had only ever been used for personal use (rather than rented out), CRA stated:

For GST/HST purposes, a sub-leasehold interest in real property is considered to be real property, and an assignment of the sub-leasehold interest by a sub-leaseholder is generally considered to be a sale of real property. An assignment of a sub-leasehold interest by a sub-leaseholder in this case is subject to the same provisions that govern a sale of real property for GST/HST purposes.

31 October 2011 Ruling Case No. 136392

The granting of easements in consideration for a single lump sum payment was ruled to be a supply of real property by way of sale even though under the governing law the easements could not be granted for an unlimited term.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 221 - Subsection 221(2) 43

29 July 2011 Headquarters Letter Case No. 122272r

In order to finance the purchase of a new condo from a builder, an individual (the "Purchaser") enters into a "Declining Partnership Agreement," or Loan Agreement, with FinanceCo which is intended to comply with the Islamic principle of declining Musharaka. Under this arrangement, Purchaser alone obtains legal title to and possession of the condo while FinanceCo obtains an equitable interest in the condo upon contributing money to Purchaser, and agrees to sell its equitable interest in the condo to Purchaser over time on a basis that permits it to earn the 'Profit" described in the Loan Agreement. After noting that s. 183(1) could apply in a default scenario, CRA stated:

If subsection 183(1) does not apply, it is a question of fact whether there would be a supply of the property from the Purchaser to [FinanceCo], whether there is consideration payable for the supply, and the GST status of the supply.

3 November 2009 HQ Letter No. 109447

surrender of leasehold interest was sale of real property

The surrender of a lease to the landlord qualified as a demise of real property, so that s. 221(2)(b) and 228(4) applied to the consideration therefor paid by the landlord.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 221 - Subsection 221(2) 29

18 January 1995 Headquarters Letter No. 11634-2

lease surrender is a sale

After referring with aproval to Lubbock Fine, CRA stated that "a lease surrender is a sale" so that a lease surrender payment would constitute consideration for a sale of "real property" as defined in s. 123(1). The portion of the surrender price that, in fact, was a return of prepaid rent would not so qualify.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Real Property leasehold interest is real property 49

GST/HST Policy Statement P-174, Emphyteutic Leases, 31 March 1995

emphyteusis is a lease, not part-ownership transfer

Essentially, an emphyteutic lease is a lease whereby the emphyteutic lessor permits an emphyteutic lessee to use the land (and any immovables on it) for a given period of time (not less than 10 years nor more than 100 years) in return for a consideration.

The consideration has two components: (1) monetary consideration as rent (which does not have to be annual); and (2) consideration from the undertaking of constructions or improvements or both which considerably increase the value of the property. At the end of the lease period, all improvements made to the land by the lessee revert back to the emphyteutic lessor (with or without compensation to the lessee for such constructions).

A supply of real property under an emphyteutic lease is considered a supply of real property by way of lease, licence or similar arrangement for GST purposes. The consideration payable in respect of the arrangement includes both the monetary rent and the value of the constructions and/or improvements to the land, as may be applicable.

Words and Phrases
emphyteutic lease

Policy P-111R "The Meaning of Sale with Respect to Real Property," February 1995.