Primary Place of Residence

GST/HST Policy Statement P-228

Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

DATE OF ISSUE

March 30, 1999

SUBJECT

Guidelines for determining a person's primary place of residence

LEGISLATIVE REFERENCE(S)
Excise Tax Act:

Subsection 254(2)
Subsection 254.1(2)
Subsection 255(2)
Subsection 256(2)

NATIONAL CODING SYSTEM FILE NUMBER(S)

11870-4-2

EFFECTIVE DATE

January 1, 1991

TEXT
Issue and decision

This policy statement outlines guidelines and criteria that may be used in determining "primary place of residence" for purposes of GST/HST new housing rebates that are claimed by purchasers or owners, or paid or credited by builders.

Specifically, as the term "primary place of residence" is not defined in the Excise Tax Act ("the Act"), the policy outlines the Departmental position that whether a residential complex or residential unit is a "primary place of residence" is a question of fact, determined on a case-by-case analysis.

"Primary place of residence" refers to a specific type of "place of residence"; that broader term is dealt with in GST/HST Memoranda Series 19.2 Residential Real Property. While there is some similarity to the term "principal residence" used under the Income Tax Act (ITA), the determination of principal residence is not necessarily an indicator of whether the residence would be the individual's primary place of residence for GST/HST purposes.

Guidelines and Criteria

Generally, a GST/HST new housing rebate may be claimed under sections 254 to 256 of the Act where a single unit residential complex or residential condominium unit is acquired, constructed or substantially renovated, or a share in a cooperative housing corporation ("co-op share") is acquired with respect to a residential unit, the complex or unit is for use as the primary place of residence of an individual or a qualifying relative and all other conditions of the particular section are satisfied.

A primary place of residence may be differentiated from a secondary place of residence since the terms primary and secondary are necessarily defined in relation to each other. Primary suggests something first in order of importance that is not subordinate or secondary. From this, it follows that where an individual has more than one place of residence, the place of residence that is not first in order of importance to that individual would be that individual's secondary place of residence as it would be subordinate to the primary place of residence (e.g. it is used mainly for recreational purposes or it is occupied less than another).

The wording of the above-noted GST/HST new housing rebate provisions does not restrict the application of the primary place of residence rule to housing in Canada. Therefore, while an individual may build or acquire a new home in Canada, if his or her primary place of residence is in another country then the home in Canada would be regarded as a secondary place of residence.

The general guidelines as noted above and the specific criteria listed below are factors in determining whether a house constitutes a person's primary place of residence. No one guideline or any one of the criteria listed may be conclusive in itself but all may be considered in determining the primary place of residence of an individual.

Criteria Indicative of a Primary Place of Residence

1. The residential complex or residential unit should be, or should be demonstrably intended to be, the particular individual's place of residence, or that of a qualifying relative, for purposes of:

  • mailing address,
  • income tax (e.g. forms or returns),
  • voting,
  • municipal/school taxes, and
  • telephone listing.

2. After possession or substantial completion, as the case may be, the individual or qualifying relative should demonstrate occupancy by moving most of his or her personal effects (in terms of use and value) into the residential complex or residential unit.

3. Where the individual or qualifying relative does not occupy the residential complex or residential unit after possession or substantial completion, as the case may be, there should be evidence that the occupation of the complex or unit was frustrated (e.g. by relocation due to employment or lack of financing).

4. Where the individual or qualifying relative has taken out insurance, the stated use of the place of residence for purposes of the insurance policy should be as the insured's personal residence, i.e. homeowner's or tenant's insurance rather than seasonal or rental property.

5. Where the individual owned or leased another place of residence at the time the residential complex or co-op share in question was acquired, constructed or substantially renovated, the disposition of that place of residence or clear evidence that that place of residence is offered for sale or rental at or before the occupation of the complex or residential unit may indicate that the complex or unit is the individual's primary place of residence.

6. Where an individual or qualifying relative owns or leases more than one place of residence and continues to occupy both of them, the following factors may indicate which one is the primary place of residence:

  • the amount of time spent at any one of the places of residences,
  • the location of the individual or qualifying relative's place of work,
  • the availability of amenities particular to the personal needs of the individual or qualifying relative, and/or individual residing with him/her, and
  • the suitability of the property for use by the individual or qualifying relative as a place of residence throughout the year.

Intention

For GST/HST new housing rebate purposes, the Act requires that the individual acquired, constructed or substantially renovated the residential complex or co-op share for use of the complex or unit as the primary place of residence of the individual or qualifying relative. This requirement may be considered to be an "intention" test.

Intentions can only be judged by outward indicators, i.e. the presence or absence of physical actions and/or evidence. The criteria discussed above would be significant factors in this regard. Where the individual or a qualifying relative does not actually use the residential complex or residential unit as a primary place of residence, absent an intervening frustrating event, it can generally be concluded that the individual did not acquire, construct or substantially renovate the complex or unit for that use. For example, an individual who purchases a residential complex and proceeds to use it for recreation would not be considered to have acquired the complex with the intention of using it as his or her primary place of residence.

It should be noted that it is possible for the individual to have more than one intention, one of which is to use the residential complex or residential unit as a primary place of residence. The individual may intend to use the complex or unit primarily as stock-in-trade or for some other business purpose. The GST/HST new housing rebate provisions of the Act do not require that the complex or unit be primarily for use as a place of residence.

The fact that the individual's primary intention may be to use the residential complex or residential unit other than as a place of residence of the individual will not on its own disentitle the claimant to a GST/HST new housing rebate. For example, an individual may construct a house primarily for the purpose of sale but upon completion occupy it as a place of residence. If, based on the guidelines and criteria discussed above, the house would be considered to be the individual's primary place of residence (i.e. if no other residence is occupied as a primary place of residence), then the claimant would be entitled to a GST/HST new housing rebate provided that all the other conditions of section 256 of the Act are met. (Note that the self-supply rules under section 191 of the Act may apply to this example.)

SAMPLE RULINGS

Sample Ruling 1

(First New Home Purchase)

Statement of Facts

1. Mr. and Ms. Smith recently completed their purchase of a single unit family home in a new residential project being developed in Brandon, Manitoba.

2. The Smiths currently rent a townhouse in Winnipeg with their two children who attend the nearby elementary school. They intend to move to their new residence at the end of the school year, which is two months away, and have given notice to their landlord that they will be vacating the townhouse at that time.

3. The Smiths have contracted with a moving company to pack all of their belongings and to move them to their new home. They have arranged to have a new telephone number go into effect immediately at the new residence and will subsequently cancel their current telephone service. Change of address cards have been completed and mailed.

4. The Smiths will be the first individuals to occupy the new house and they intend to live in it for at least the next five years.

Ruling Given

The Smiths' new home would be recognized as their primary place of residence. Provided they meet the other conditions, they are entitled to a GST/HST new housing rebate under section 254 of the Act.

Rationale

The Smiths have demonstrated that they will occupy the new house as their primary place of residence within a period of time after acquisition that is reasonable in the circumstances. They are the legal and beneficial owners of the house. They do not own any other house, have changed their mailing address and telephone number, and have made plans to move their belongings to their new home.

Sample Ruling 2

(First Use as Recreational Property)

Statement of Facts

1. Ms. Roy constructs a single unit residential complex (SURC) which she calls a "cabin" and states that she intends to use it as her primary place of residence in two years upon retirement.

2. She currently uses the cabin as a recreational property.

3. The cabin is insured as a seasonal residence.

Ruling Given

Ms. Roy is not using her SURC as her primary place of residence, at this particular time. She is not entitled to claim a GST/HST new housing rebate.

Rationale

Whether Ms. Roy constructs or purchases the SURC, she uses the complex as a vacation home showing clearly the intention to use the complex immediately upon completion as a secondary residence while another residence is used as her primary place of residence.

As Ms. Roy did not acquire the SURC with the intention of using it as her primary place of residence within a reasonable period of time, she is not entitled to a GST/HST new housing rebate.

Sample Ruling 3

(First Use as a Place of Residence)

Statement of Facts

1. Ms. Brown has purchased a house in Nanaimo in September. The house was substantially renovated for year-round use immediately prior to Ms. Brown's purchase and sits on a one acre lot with beach and road access. No one has occupied the house between the renovation and Ms. Brown's occupancy.

2. Ms. Brown is employed by the provincial government in Victoria. She will be retiring on March 31 next year, and purchasing the house in Nanaimo is part of her retirement plans.

3. Ms. Brown had been living in a large apartment, but within a month after buying the house she moved to a smaller, furnished one closer to work. Most of her own furniture and accessories have been moved to the house. She has purchased a homeowner's insurance policy for the house.

4. Ms. Brown stays at the apartment in Victoria from Sunday evening to Friday evening, driving to Nanaimo after work on Friday and returning to Victoria late Sunday. She expects to be able to continue this pattern throughout the winter. She will not be using the house for recreation.

5. Ms. Brown considers Nanaimo to be her home, and not Victoria.

6. Ms. Brown has not yet sent out "change of address" cards and all her bills come to her Victoria address.

7. Ms. Brown has changed her address to Nanaimo with the provincial Registrar of Voters and Elections Canada.

Ruling Given

Ms. Brown uses the house as her primary place of residence. Provided she meets the other requirements of section 254 of the Act, Ms. Brown would be entitled to a GST/HST new housing rebate.

Rationale

Given her use of the house and the small apartment, it is apparent that each is a place of residence for Ms. Brown. Because of Ms. Brown's current and intended use of the house, however, it can be seen be to her life's focus and first in importance, whereas the apartment is a transitory residence. Consequently, the house would be considered to be her primary place of residence.

Sample Ruling 4

(Non-Resident - Recreational Residence)

Statement of Facts

1. Mr. and Ms. Johnson had a single unit residential complex constructed in Canada in 1991.

2. They were the first individuals to occupy the complex when it was completed and are registered as the joint owners of the residence.

3. Both are American citizens and are residents of the United States.

4. Both have full time jobs in the state in which they reside.

5. The residence is used for recreation on weekends and holidays during the summer and fall.

Ruling Given

The residence is not the Johnsons' primary place of residence. They are not entitled to a GST/HST new housing rebate.

Rationale

In this case it is a fact that the house built in Canada was for use as a secondary residence or vacation home and not as a primary place of residence. Although it is the Johnsons' only place of residence in Canada it does not change the fact that their primary place of residence is in the United States.

As the Johnsons did not have the house constructed for use as their primary place of residence they are not entitled to a GST/HST new housing rebate.

Sample Ruling 5

(Spouses and Separate Residences)

Statement of Facts

1. Mr. and Ms. Jones reside in Halifax. The legal title to their house is in Ms. Jones's name only.

2. Ms. Jones accepted a job in Charlottetown on a permanent basis and moved there in September 1993. Shortly after, the couple's house in Halifax was put up for sale.

3. Ms. Jones purchased a newly constructed residential condominium unit from a builder in Charlottetown. The unit was registered in her name only.

4. Ms. Jones resided alone in the condominium unit for eight months until Mr. Jones sold the house in Halifax and moved to Charlottetown.

Ruling Given

Mrs. Jones's residential condominium unit is her primary place of residence. If all other conditions are met, she is entitled to a GST/HST new housing rebate under section 254 of the Act.

Rationale

Under the circumstances, i.e. Ms. Jones's new job in Charlottetown and the sale of the couple's residence in Halifax, it is concluded that the couple acquired the residential condominium unit in Charlottetown for use as Ms. Jones's primary place of residence.