Sale of commercial real property (GST/HST)

A business sale that includes a commercial building or land puts real property inside the deal. The CRA’s guide for registrants lists sales or rentals of commercial real property among its examples of taxable supplies. This entry covers the federal rules in the Excise Tax Act. For how it fits a purchase, see who pays GST/HST on the building when you buy a business with its real estate.

Who collects and who pays

Section 221(1) of the Act has a person who makes a taxable supply collect the tax. Section 221(2) relieves a supplier (other than a prescribed supplier) of a taxable sale of real property from collecting the tax in listed cases: where the supplier is a non-resident person, where the buyer is registered (with extra conditions for an individual), where the parties have made an election under section 2 of Part I of Schedule V, or where the buyer is a prescribed recipient. The CRA says the purchaser then pays any tax due directly to the CRA, and section 228(4) sets out how and when.

What to check

• Whether the sale of the building is a taxable supply of real property, which an accountant should confirm
• Whether the buyer is registered, since registration is one of the listed cases
• What the agreement says about tax on the building and who reports it
• Whether a section 167 election is being made, since the Act keeps a taxable sale of real property to a non-registrant outside that election’s relief