To Pay HST or Not?


source: Elliot & Elliot Barristers and Solicitors

This month’s newsletter features answers to when HST is applicable in a variety of situations. Set out below I have addressed chattels, vacant land, excess land and how to obtain a ruling.


Are Chattels Subject to HST?

This is an interesting question because if one were to Google this question you would find many conflicting answers. I actually spent a couple of hours with 4 different representatives of the Canada Revenue Agency (CRA) to determine the answer.

The short answer is NO. While the representatives of the CRA could not point me to a bulletin this was because in their opinion it was obvious. Until I performed a Google search during a telephone call with a representative from the ruling department, they were not aware there was any confusion. The first reason that the sale of used chattels is not taxable is due to the fact that the seller of a used residential owner-occupied property is not an HST registrant for the purpose of their home. The other reason is that the Excise Tax Act addresses the situation when the supply is a combined supply. The Act provides that where a supply of any combination of services, personal property or real property is made and the consideration of each element is not separately identified where the value of a particular element can reasonably be regarded as exceeding the value of each of the other elements, the supply of all of the elements shall be deemed to be a supply only of a particular element.

So based on the fact that the seller of a used residential owner-occupied property is not in the business of selling chattels, not an HST registrant and the chattels are not valued separately but rather a smaller item which is incidental to the real property sale, HST is not applicable. The exemption that applies to the real property sale applies also to the chattels.

Vacant Land

This information pertains to the application of the HST to the sale of vacant land by individuals. It focuses on the sale of personal use land, rather than land sold in a business, and provides examples of how the HST applies to common situations involving these sales.

Is the Sale of Vacant Land Subject to HST?
The answer is probably not; but maybe.

Situations when the sale will be tax exempt:

  • If the vendor is an individual and the land was kept by that person for personal use.
  • If the parcel is being created by subdividing another parcel and the vendor is an individual and the land is being sold to a relative (including a former spouse or common-law partner) for their personal use.
  • If you have never previously subdivided or severed your parcel of vacant land from another that you owned, and you subdivide the parcel into only two parts, the sale of either of those parts is exempt
Situations when the sale will be subject to HST:
  • If the sale of the land is capital property that had been used primarily in a business, or the sale of the land is in the course of business. 
  • If the land was subdivided into more than two parts, sales of the severed portions are taxable, unless sold to a relative for personal use.

For additional information review the CRA bulletin found at:

Excess Land

How much land is too much land?

It is important to turn your mind to whether a used residential property is subject to HST if that property is larger than a half hectare. The CRA's definition of a principal residence includes a limit on the land size to a half hectare. This is the amount of land that is usually considered to be reasonably necessary for the use and enjoyment of the building as a place of residence. This is not a firm rule there is room for the land included in the principal residence to be expanded if it can be shown to be reasonably necessary for the use and enjoyment of the building as a residence. For example, the land in excess of the half hectare could be considered reasonably necessary if the location of the buildings on the lot require land in excess of a half hectare to permit access to public roads, or if there is a minimum lot size restriction.

In cases where you are faced with separating the excess land from the residence land for HST purposes the value assigned to each part must be fair and reasonable i.e. based on the fair market value of each portion. Restrictions that would be placed on the excess lands would impact this assessment.

The facts of each situation must be reviewed carefully. The tax treatment by previous owners should also be considered. For the real estate agent drafting the agreement of purchase and sale knowledge of this issue is required. The agreement should be drafted to acknowledge that lands in excess of that reasonably required for the residence may be subject to HST. The apportionment and valuation should be left to the lawyers to sort out.


How to get assistance with determining if HST is due?

The CRA offers a rulings and interpretation service in relation to taxes and duties on goods and services. This free service is called the Excise and GST/HST Rulings and Interpretation Service. This service issues technical publications, as well as both rulings and interpretations on taxes and duties.  

An interpretation is a written statement that the CRA provides to a taxpayer which sets out the CRA’s view on the application of legislation to a generic fact situation.

A ruling is a written statement the CRA provides to a taxpayer that sets out the CRA’s position on how the relevant provisions of the legislation apply to a clearly defined fact situation of the taxpayer. A ruling applies only to the taxpayer who requests it or on whose behalf it is requested, and only to the issues covered by the ruling. Typically, a ruling relates to ongoing issues or transactions and does not specify time limits, it may also be given in advance of any proposed transaction.

Fact Specific Rulings
The CRA will issue a ruling only when the person requesting the ruling has provided all of the relevant facts of a transaction or series of transactions. The CRA considers itself to be bound by the rulings it issues, subject to certain limitations which can be found at the following website:
For any further enquiries on HST you can call: 1-800-959-8287


The best piece of advice that I can give to anyone questioning whether HST is applicable to their individual situation is to call the CRA. You will need to set aside a few hours to get through the various menus and be ready to be transferred multiple times but it is worth it to obtain an answer.

The content of the articles in this Newsletter are intended to provide a general guide to subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Article Source: Elliot & Elliot Barristers and Solicitors.  Article posted with permission of Shari Elliot.