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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 81072
April 19, 2011
Dear [Client]:
Subject:
GST/HST RULING
GST/HST treatment of trailer park site rental
This is in reply to your letter concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the rental of a site at [...] (the Park) and the pro-rated portion of the municipal taxes that [...] ([the Company]) charges to you with respect to the site rental. We apologize for the delay in responding.
HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
The following facts are based on the information set out in your letter, our telephone discussion, as well as copies of documents and receipts provided.
Statement of Facts
1. The Park is located at [...] in [...], in the municipality of [...], [...] [Province X]. The Park has a total of [...] sites. For GST/HST purposes, the Park is not a residential trailer park as that term is defined in subsection 123(1).
2. The majority of the sites are for six months seasonal occupancy from May 1st through to Thanksgiving, as the water to these sites is turned off for the winter. The section of the Park that generally allows for longer stays has a winterized water system.
3. Some occupants asked for mail delivery at the Park and the [...] Post office installed post office boxes at the entrance to the Park.
4. Electrical, water and sewer facilities, and phone service are available to all sites.
5. You first began renting a site at the Park, Lot [...] in [yyyy]. Up until August [yyyy], you used the unit for holiday and weekend stays. In August of [yyyy] you began to use the unit at the Park as your permanent and only place of residence.
6. You have provided copies of various documents dated [yyyy] to [yyyy], including Notice of Assessments and Statements of Account from CRA, as well as copies of correspondence from [the Company], showing your address as Box [...], the Park, [...], [Province X].
7. You purchased your unit, a park model home manufactured by [...], in December [yyyy]. The unit measures [...] x [...] feet. You had an addition measuring [...]' x [...]', also manufactured by [...], attached to the unit, providing a total living area of about [...] square feet.
8. The unit is supported on concrete blocks and installed on a full concrete pad built specifically to receive the unit, in a manner that is conducive to long-term residential use. The wheels and tongue, originally used for transporting the unit to the site, have been removed. The unit is permanently and directly connected year-round to service facilities including hydro, natural gas, underground winterized water pipes and septic. The unit cannot be readily disconnected from these services and is equipped with central air. The unit is finished with siding, has a shingled roof with eavestroughing and downspouts, and is fully skirted. It includes a large raised deck that wraps around on three sides. The site is fully landscaped with plants and shrubs planted around the perimeter of the unit. You have provided photos of your unit.
9. From August [yyyy] until October [yyyy], the Park was your only place of residence. You paid rent monthly, and you were temporarily away from the trailer park [...] during the winter, generally during [...].
10. In addition to your site rental, you paid [the Company] an amount as your share of the municipal taxes assessed in respect of your unit. Hydro to your unit was metered and invoiced to you by [the Company] every [...] months.
11. You sold your unit at the Park in October [yyyy]. The unit remains on the site at the Park.
Ruling Requested
You are requesting a ruling as to whether the rental of the site in the Park on which your unit is situated and the amount charged to you by [the Company] for municipal taxes assessed in respect of your unit are subject to the GST/HST.
Ruling Given
Based on the facts set out above, we rule that the total amount charged for the rental of the land, including the additional amount charged to you by [the Company] for your share of the municipal taxes assessed in respect of your unit located on Lot [...] in the Park is consideration for a supply of the land that is exempt of the GST/HST under subparagraph 7(a)(i) of Part I of Schedule V to the ETA.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Subparagraph 7(a)(i) of Part I of Schedule V to the ETA provides that a supply of land (other than a site in a residential trailer park) made by way of lease, licence or similar arrangement that provides for continuous possession or use of the land for at least one month is exempt if the supply is made to an owner, lessee or person in occupation or possession of a residential unit that is or is to be affixed to the land for the purpose of its use and enjoyment as a place of residence for individuals.
Subsection 123(1) defines the term "residential unit" to include a house, semi-detached house, mobile home or "any other similar premises". Whether a particular unit has the same permanent residential characteristics as a house such that it is considered to be a "residential unit", is affixed to the land, and is used as a place of residence for individuals is determined on a case-by-case basis taking into consideration the facts and circumstances of the particular case.
Based on the facts referred to above, the unit is considered to be a residential unit. Modifications have been made to the unit such that the unit has the same permanent residential characteristics as a house, is installed in a permanent manner that is conducive to long-term residential use and is connected in a permanent way to hydro, gas, water and septic facilities. As such, the unit is considered to be a residential unit that is affixed to the land. Except for the [...] periods during which time you temporarily travelled away from the Park for the winter, you resided full-time at the unit situated on the site at the Park. The fact that you were absent from the Park for a period during the winter months does not preclude the unit from being considered your place of residence. In this case, the facts indicate that the unit was your primary and only place of residence in Canada from August [yyyy] until October [yyyy]. Where a residential unit is an individual's primary place of residence, the particular unit meets the requirement that the unit be for use and enjoyment as a place of residence for individuals. As such, all of the requirements of subparagraph 7(a)(i) of Part I of Schedule V to the ETA are met.
Additional Rent - property taxes
Property taxes paid by a property owner to the municipality are generally not subject to GST/HST. The property owner generally includes an amount that represents a recovery of such taxes from the lessee either as part of the basic rent or as an additional rent. Where a separate amount is paid by a lessee on account of property taxes assessed against the property owner, this amount is part of the consideration for the rental of the property, even if the lessee pays the amount directly to the municipality. As such, the amount will take on the same tax status as the rent. In this case, since the rental of the land on which the residential unit is situated is exempt of GST/HST, the additional amounts charged by [the Company] for your share of the municipal taxes assessed in respect of your unit are not subject to GST/HST.
Tax paid in error
Under the ETA, where a person has paid an amount as or on account of tax that was not payable, the person may request a refund or credit of the amount from the supplier. A supplier may refund or credit the tax within two years after the day the amount was charged or collected. Further information on the time limitations and conditions for claiming refunds and credits is available in GST/HST Memoranda Series Chapter 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act available on the CRA Web site.
Where a refund or credit is not issued by the supplier, the person may make an application under subsection 261(1) for a rebate of the tax paid in error by completing and submitting application form GST 189 General Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST). It should be noted that a rebate application made under section 261 cannot include amounts that were paid in error more than two years before the application is filed. [...].
[...]
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9212. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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