IPP that relates to real property

The general rules for supplies of IPP will not apply to supplies of IPP that relate to real property. Instead, the following rules will apply:

• A supply of IPP that relates to real property is made in a participating province if the real property that is situated in Canada is situated primarily (more than 50%) in the participating provinces and the greatest proportion of the real property that is situated in the participating provinces is situated in that participating province. If the real property is equally situated in two or more participating provinces, the supply of the IPP is made in the participating province among those participating provinces for which the rate for the provincial part of the HST is the highest. If two or more of the participating provinces in this case have the same rate for the provincial part of the HST, HST will be required to be charged by the supplier using that particular rate.
• A supply of IPP that relates to real property is made in a non-participating province if the real property that is situated in Canada is situated less than primarily (50% or less) in the participating provinces.

IPP that relates to real property in Canada and outside Canada

A supply of IPP that relates to real property is considered to be made in Canada if the real property is situated in Canada and is considered to be made outside Canada if the real property is situated outside Canada. Where a supply of IPP that relates to real property is made and the real property is both situated in Canada and outside Canada, the proportion of the supply of the IPP that relates to the real property that is situated in Canada is considered to be made in Canada while the proportion of the supply of the IPP that relates to the real property that is situated outside Canada is considered to be made outside Canada. As a result, it is only the provision of the proportion of the supply of the IPP that relates to real property that is situated in Canada that may be considered made in a participating province and subject to the HST.

Examples
A New Brunswick company makes a supply to a Quebec company of IPP that relates to real property that is situated entirely in New Brunswick. The real property that is situated in Canada to which the IPP relates is situated primarily in the participating provinces and the participating province in which the greatest proportion of the real property that is situated in the participating provinces is situated is New Brunswick. The supply of the IPP is therefore made in New Brunswick and HST will apply at a rate of 13%.

A company in British Columbia (BC) owns land in BC and the United States and makes a supply of IPP that relates to the land to another BC company. The land in BC represents 20% of the total land and the land in the United States represents 80% of the total land. The real property that is situated in Canada to which the IPP relates is situated primarily in the participating provinces and the participating province in which the greatest proportion of the real property that is situated in the participating provinces is situated is BC. The proportion of the supply of the IPP that relates to the real property that is situated in Canada is therefore made in BC and HST will apply at a rate of 12%. The proportion of the supply of the IPP that relates to the real property that is situated outside Canada is considered made outside Canada and is not subject to tax.

For more examples, see GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax - Place of supply rules for determining whether a supply is made in a province.

Forms and publications

• GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax - Place of supply rules for determining whether a supply is made in a province