GST/HST Memorandum 19.2 “Residential Real Property” February 1998

Choice of calculation method

30. In cases where there are rental periods of varied length, some of which are 60 days or more and some of which are less than 60 days, a method must be chosen for determining if the establishment meets the 90%-or-more test. The method should be appropriate in the circumstances and be used consistently.

Acceptable methods

31. Acceptable methods include basing the calculation on revenues (either daily or total), or on identical lease periods or intervals such as number of “room nights” sold, or on the number of rooms available for rent for periods of less than 60 days and those for periods of 60 days or more.

Time period

32. The time period to be used when determining if the establishment meets the 90%-or-more test is also flexible provided the period is reasonable for the supplies in question and is used on a consistent basis. Normally, a one year period is appropriate. However, the period could differ depending on the nature of the operations (e.g., seasonal).

Calculated once

33. If the test is applied on a prospective basis and covers a reasonable period of time (a full year), the resulting determination will not need to be revised unless actual operations turn out to be materially different from those foreseen.

Place of residence v. lodging

16. The meaning to be attributed to a "place of residence" as opposed to "lodging", is based on a determination of the purposes of the stay, the amount of time of the stay, and physical preseence. ... [T]he place should not normally include an abode of a transient nature.

Meaning of “place of residence”

15. “Place of residence” is a key concept in the definitions of “builder”, “residential complex”, “residential unit” and “short-term accommodation”. Also, as discussed in Section 19.2.3, Residential Real Property—Deemed Supplies, place of residence is a key concept in the application of the change-in-use rules under section 190 (conversion to residential use) and the self-supply rules under section 191 as GST/HST liability under these sections is triggered only if the tenant occupies the complex as a place of residence, rather than as a place of lodging.

Residence vs. lodging
Policy statement P-130

16. The meaning to be attributed to a “place of residence”, as opposed to “lodging”, is based on a determination of the purpose of the stay, the amount of time of the stay, and physical presence. In considering these factors, the following principles need to be considered:

No vacation/transient purpose

(a) While an individual has only one primary place of residence, it is possible for an individual to have more than one place of residence. To be considered an individual's place of residence, the place should be used for purposes of habitation or dwelling, but would not normally include an abode of a transient nature. (For example, subject to other factors considered below, short-term hotel accommodation would not normally be considered an individual's place of residence.)

Indicators of permanency

(b) Factors which indicate that a place is a person's place of residence and not being used for transient purposes include:

• the place in question is the only residence of the individual;
• the individual who is the occupant owns or leases the premises, as opposed to occupying the premises under a licence (such as a hotel room);
• if leased, the lease entered into between the landlord and tenant is of a long-term nature;
• the place is furnished by the occupant;
• the occupant is responsible for payment of utilities;
• there has been a change of address for postal, municipal/school tax and other purposes (e.g., driver’s licence, medical insurance);
• there is a telephone listing for the occupant at the place of residence;
• the individual has taken out an insurance contract for the home and/or its contents.

…

Examples

Example 1

An individual leases a cottage in the country on a continuous basis over several years. The cottage is fully furnished by the individual, and the individual's personal belongings (such as most of his casual clothing and his sports equipment for fishing and skiing) are located in the cottage. The individual occupies the cottage only one weekend a month. The rest of the time, the cottage remains unoccupied or is occupied occasionally (for a weekend) by a friend or relative of the individual. This cottage qualifies as a place of residence of the individual since he has his personal belongings there and will use the cottage for an indefinite period of time. (It is not likely, however, that this is his “primary” place of residence.)

Example 2

An individual rents a cottage in the country for a month from a co-worker. The individual brings clothing, groceries, hiking equipment and her reference guides to birds and wildflowers. She occupies the cottage for the entire month. In this situation, the cottage is not being occupied as a place of residence of this individual as the stay is of a transient and temporary nature. Rather, it would be considered to be a place of lodging.