The GST/HST Status of Support Mechanisms and Related Items for Mobile Homes, Travel Trailers, Motor Homes and Similar Vehicles or Trailers When Provided Otherwise than by Way of Sale

From: Canada Revenue Agency

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.

GST/HST Policy Statement P-070R

Date of Issue

January 20, 1999

Subject

This policy statement concerns the GST/HST status of support mechanisms and related items for mobile homes, travel trailers, motor homes and similar vehicles or trailers, when provided otherwise than by way of sale.

Legislative Reference(s)

Definitions of "mobile home", "residential trailer park" and "trailer park" in subsection 123(1) of the Excise Tax Act (ETA), section 138 of the ETA and paragraph 7(b) of Part I of Schedule V to the ETA.

National Coding System File Number(s)

11870-2, 11870-5

Effective Date

January 1, 1991 for GST

April 1, 1997 for HST

Issue

At issue is the GST/HST status of support mechanisms and related items for mobile homes, travel trailers, motor homes and similar vehicles or trailers, when provided otherwise than by way of sale.

Paragraph 7(b) of Part I of Schedule V to the ETA exempts certain supplies of sites in residential trailer parks by way of lease, licence or similar arrangement. However, the exempting provision does not specifically refer to the provision of support mechanisms or other related items, such as steps, patios, decks and tie-downs, by the owner of the residential trailer park in conjunction with the supply of the site. If the owner of the residential trailer park sells a support mechanism or other related item to the lessee of the site, the sale is a separate supply from the supply of the site, and will be taxable. However, the support mechanism will normally be provided otherwise than by way of sale. In the case of tangible personal property, this means by way of loan or lease. In the case of real property, this means by way of loan, lease, licence or similar arrangement.

If the provision of support mechanisms and related items otherwise than by way of sale can be shown to form part of the supply of the site, no tax would be owing, since the supply of the site is tax exempt. However, if the provision of support mechanisms and/or related items is a separate supply from the tax exempt supply of a site, the separate supply would be taxable.

If a travel trailer, motor home or similar vehicle or trailer, is permanently affixed to land (e. g. by means of a foundation), the vehicle or trailer and the related land form a residential complex, as outlined in Policy Statement P-104R, Meaning of "Mobile Home", "Residential Unit" and "Residential Complex" in the Context of Mini-homes, Park Model Trailers, Travel Trailers and Motor Homes. The policy in P-104R also applies to mobile homes, otherwise than when affixed to a site in a residential trailer park. The definition of "residential complex" specifically excludes sites in residential trailer parks.

In any event, where a site in a residential trailer park is provided by way of lease, licence or similar arrangement, whether to the owner of a mobile home, or the owner of a travel trailer, motor home or similar vehicle or trailer, the vehicle or trailer is usually not permanently affixed to a foundation. It must therefore be temporarily set on a support mechanism during the time that it remains on the site. A support mechanism may consist of a concrete pad or a set of concrete pillars imbedded in the ground. Alternatively, it may consist of a group of concrete blocks or railway ties that are set on a bed of gravel, rather than being affixed to the land.

Of the related items, the steps, patios and decks are not usually affixed to the land, but could be. Tie-downs are not affixed to the land, since they can be readily untied from the vehicle or trailer and the support mechanism to which they are temporarily attached.

Decision

The tax status of the provision of a support mechanism and/or related item otherwise than by way of sale, when provided with a supply that is exempt under paragraph 7(b) of Part I of Schedule V to the ETA, is set out below.

(a) If the site includes a support mechanism that is imbedded in the ground, the supply of the site will include the provision of the support mechanism, as the support mechanism would be considered to be a fixture or appurtenance to the site, and it would not be possible to rent the site without also receiving use of the support mechanism. The provision of the support mechanism would therefore be considered part of a supply of a site that is exempted by paragraph 7(b) of Part I of Schedule V to the ETA, even if charged for separately or invoiced separately.

(b) If a support mechanism consists of concrete blocks or railway ties placed on a gravel base, the provision of the gravel base is considered to be part of the single supply of the site, because it is incorporated into the site. The concrete blocks or railway ties, not being permanently affixed or incorporated into the site, are not viewed as fixtures or appurtenances to the site. However, the provision of the blocks or ties otherwise than by way of sale may still form part of a single supply of a site in a residential trailer park if they can be considered part of the same supply under Policy Statement P-77R.

The guidelines established in P-77R indicate that the supply of the site and the provision of a support mechanism or related item otherwise than by way of sale may constitute one supply if the transaction contains a sufficient number of the following criteria:

(i) there is one supplier and one recipient;

(ii) only one amount is shown on the invoice as consideration;

(iii) the supply is invoiced and represented as being the supply of a site in a residential trailer park, rather than being referred to in terms of its component parts;

(iv) the supply of the related item or items is contingent on the supply of the land; and

(v) the supply of the related item or items would serve no useful purpose without the supply of the site.

Even if the provision of the concrete blocks or railway ties otherwise than by way of sale is not considered part of a single supply of the site under Policy Statement P-77R, the supply of the concrete blocks or railway ties may still form part of the supply of the site under section 138 of the ETA, if the two supplies are made for a single consideration, and the supply of the concrete blocks or railway ties is incidental to the supply of the site. For further details on the application of section 138 of the ETA, please refer to Policy Statement P-159R, Meaning of the Phrase "Reasonably Regarded as Incidental" and Policy Paper P-160R, Meaning of the Phrase "Where a Particular Property or Service is Supplied Together With Any Other Property or Service".

If the provision of concrete blocks or railway ties otherwise than by way of sale is determined to be a separate supply, that separate supply is taxable, as no exempting provision would apply.

(c) Similarly, if the owner of the residential trailer park supplies a site that has steps, a patio or a deck permanently affixed to the site, the steps, patio or deck are considered to be a part of the site that is being supplied. Therefore the provision of the steps, patio or deck is part of the supply of the site. If the steps, patio or deck are temporarily affixed, they would not be considered to be fixtures or appurtenances to the site.

They may, however, be provided as part of a single supply of the site under the policy in P-77R or under section 138 of the ETA, in accordance with the policy set out in P-159R or P-160R. If the provision of the steps, patio or deck otherwise than by way of sale is a separate supply from the supply of the site, then the supply of the steps, patio or deck is taxable, since no exempting provision would apply.

(d) The owner of the park may also provide tie-downs otherwise than by way of sale to the owner of the vehicle or trailer for fastening the vehicle or trailer to the support mechanism. This is necessary for purposes of stability, unless the vehicle or trailer is manufactured with hurricane straps, which unfold from the vehicle or trailer and screw into the ground like augers. Since tie-downs, by their nature, are not permanently affixed, they are not considered to be fixtures or appurtenances of the site. However, the loan or rental of the tie-downs may still form part of the supply of the site under the policy in P-77R or under section 138 of the ETA, in accordance with the policy set out in P-159R and P-160R. If the provision of the tie-downs otherwise than by way of sale is considered to form a separate supply, the separate supply is taxable, as no exempting provision would apply.

Supplies Made in Quebec

Although this policy applies nationally, situations in Quebec may be affected by the wording of the Quebec Civil Code (previously the Civil Code
of Lower Canada). For example, if the Quebec Civil Code deems a support mechanism or related item to be an immovable, the provision of the item otherwise than by way of sale may form part of a related tax exempt supply of a site by way of lease, licence or similar arrangement, even though the transaction may not fit within any of the criteria above. Therefore, in Quebec, it is of prime importance that the tax status of these supplies be determined only after having considered the Quebec Civil Code, namely Book Four - Property, Title One - Kinds of Property and its Appropriation, Chapter 1 - Kinds of Property.

Application to Other Parts of Section 7

This policy statement is intended to clarify the tax status of the provision of support mechanisms and/or related items otherwise than by way of sale, when made in conjunction with the supply of a site by way of lease, licence or similar arrangement, where that supply is exempted by paragraph 7(b) of Part I of Schedule V to the ETA. However, the same principles apply to the provision of items otherwise than for sale, when provided in conjunction with a supply of land that is exempted by paragraph 7(a), or when provided in conjunction with a supply of land or a site by way of assignment that is exempted by paragraph 7(c).

For example, if a person supplies land by way of lease, licence or similar arrangement to the owner of a residential unit that is to be affixed to the land for use as a place of residence, and the supply of the land is exempted by paragraph 7(a), and the same person also leases a garden shed to the owner of the residential unit for use on the land, applying this policy to the facts of the case will determine whether the provision of the garden shed is part of the tax exempt supply of the land. If the provision of the garden shed is a separate supply, that separate supply will be taxable.

EXAMPLES

The following examples are intended to illustrate the tax treatment of the supplies already discussed. However, the facts of each situation must be examined carefully. If some of the facts in the following examples were to be changed, this could change the GST/HST status of the transactions.

EXAMPLE 1

Facts

1. The owner of a residential trailer park makes a supply of a site in the park by way of lease for at least one month to an individual who owns a travel trailer, so that the lessee can park his or her travel trailer on the site. The supply is exempt of tax pursuant to paragraph 7(b) of Part I of Schedule V to the ETA.

2. The owner of the park has built concrete pillars into the site, for use in supporting the travel trailer. The use of this support mechanism is invoiced and charged for on a separate invoice. The owner of the park is uncertain as to the tax status of the provision of the concrete pillars.

Decision Provided

The provision of the concrete pillars forms part of the tax exempt supply of the site, so GST/HST does not apply.

Rationale

The support mechanism, consisting of a set of concrete pillars, is a fixture of or an appurtenance to the site. The definition of "residential trailer park" in subsection 123(1) of the ETA indicates that a fixture or an appurtenance forms part of the site. Therefore, the provision of the support mechanism forms part of the supply of the site.

It is stated in the facts that the supply of the site is exempt of tax under paragraph 7(b) of Part I of Schedule V to the ETA, so the tax exempt supply would include the provision of the support mechanism.

EXAMPLE 2

Facts

1. The owner of a residential trailer park makes a supply of a site in the park by way of lease to an individual who has leased a motor home, so that the lessee of the site can park his or her motor home on the site. The supply is exempt of tax pursuant to paragraph 7(b) of Part I of Schedule V to the ETA.

2. The owner of the park also lends concrete blocks to the lessee of the site, for use as part of a support mechanism for the motor home. The concrete blocks are not separately identified or charged for. The owner of the park is uncertain as to the tax status of the loan of concrete blocks.

Decision Provided

The provision of the concrete blocks to the lessee forms part of the tax exempt supply of the site, so GST/HST does not apply.

Rationale

The provision of the concrete blocks cannot be considered part of the supply of the site on the grounds that the concrete blocks are a fixture or an appurtenance to the site, because they are not permanently affixed to the site.

However, in the particular fact situation described in this example, using the factors set out in Policy Statement P-77R, Single and Multiple Supplies, we have concluded that the provision of the concrete blocks forms part of a single supply of the site.

There is only one supplier and only one recipient, the items are not separately identified or charged for, and the supply of the concrete blocks is dependent on the supply of the site. The supply of the concrete blocks is of no value to the lessee without the supply of the site, since concrete blocks may not be necessary at another site. Therefore, the supply of the concrete blocks is part of the supply of the tax exempt supply of the site.

EXAMPLE 3

Facts

1. The owner of a residential trailer park makes a supply of a site in the park by way of lease for at least one month to an individual who owns a mobile home, so that the lessee can park his or her mobile home on the site. The supply is exempt of tax under paragraph 7(b) of Part I of Schedule V to the ETA.

2. Upon the request of the lessee, the owner of the park provides portable steps to the lessee of the site, so that the steps can be temporarily attached to the lessee's mobile home. The steps are listed separately on the same invoice, but there is only one amount charged for the supply of both the site and the steps. The owner of the park is uncertain as to the tax status of the provision of the concrete steps.

Decision Provided

The provision of the steps to the lessee is part of the tax exempt supply of the site.

Rationale

It is true that the provision of the steps cannot be considered part of the supply of the site on the grounds that the steps are a fixture or appurtenance to the site,
because they are not permanently affixed to the site.

It is also true that the provision of the site and the provision of the steps may not fit the definition of a single supply in Policy Statement P-77R, Single and Multiple Supplies, because the site and the steps are identified separately on the supplier's invoice, and the steps could easily be used as steps for a mobile home in some other location.

However, the provision of the steps is deemed to be part of the tax exempt supply of the site under section 138 of the ETA, because the site and the steps are supplied together for a single consideration, and the supply of the steps is incidental to the supply of the site.

EXAMPLE 4

Facts

1. The owner of a residential trailer park makes a supply of a site in the park by way of lease for at least one month to an individual who is in possession of a mobile home, so that the lessee of the site can park his or her mobile home on the site. The supply is exempt of tax under paragraph 7(b) of Part I of Schedule V to the ETA.

2. The owner of the park also leases a portable patio to the lessee of the site, so that the patio can be temporarily attach to the lessee's mobile home. A separate amount is charged for the patio. The owner of the park is uncertain as to the GST/HST status of the provision of the patio.

Decision Provided

The lease of the patio to the lessee of the site is a separate supply that is taxable.

Rationale

The provision of the patio cannot be considered a part of the supply of the site on the grounds that the patio is a fixture or appurtenance to the site, because the patio is not permanently affixed to the site. The provision of the site and the provision of the patio do not fit the definition of a single supply in Policy Statement P-77R, Single and Multiple Supplies, because the site and the patio are separately identified and charged for on the supplier's invoice. Section 138 of the ETA does not apply to the situation, because although the supply of the patio is incidental to the supply of the site, the two supplies are provided for separate considerations. Since the provision of the patio is a separate supply, and since no exempting provision applies, the supply of the patio is taxable.

Decision Tree for GST/HST Policy Statement P-70R Re the GST/HST Status of Support Mechanisms and Related Items for Mobile Homes, Travel Trailers, Motor Homes and Similar Vehicles or Trailers, When Provided Otherwise than for Sale.

Decision Tree for GST/HST Policy Statement P-70R Re the GST/HST Status of Support Mechanisms and Related Items for Mobile Homes, Travel Trailers, Motor Homes and Similar Vehicles or Trailers, When Provided Otherwise than for Sale.
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