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Self-Supply Rules Trap Care Home!

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The Tax Court of Canada recently released its decision in Windsor Elms Village for Continuing Care Society v. The King (2023 TCC 58), which dealt with the application of the GST/HST self-supply rules to a long-term care facility for seniors. The decision illustrates the complexity of the self-supply rules under the Excise Tax Act (“ETA”), especially in the context of mixed use or exempt use real estate transactions.


The Appellant, Windsor Elms Village, operated a long-term care facility for seniors in Nova Scotia.  It decided to build a new facility using funding from the Nova Scotia government.  The Appellant claimed input tax credits (“ITCs”) for the construction costs and reported GST/HST collectible on a deemed “self-supply” of the facility under subsection 191(3) of the ETA.  This subsection is triggered when the builder of a “multiple unit residential complex”gives possession or use of a residential unit in the complex to an individual to use as a place of residence.  The subsection deems the builder to have made and received a taxable supply by way of sale of the complex, generally requiring it to collect and remit tax on the supply.

On audit, CRA assessed the Appellant and increased the GST/HST collectible on the self-supply to cover the ITCs claimed, pursuant to section 191.1 of the ETA.  This section deems the GST/HST collectible on a self-supply to be equal to the ITCs claimed by the builder if certain conditions are met, including (a) at least 10% of the residential units are intended to be given to seniors and used as their places of residence or lodging; and (b) the builder received or can reasonably expect to receive “government funding” for the purpose of making units available to seniors.  The assessments were appealed to the Tax Court.

Tax Court Decision

On appeal, the Appellant argued that section 191.1 did not apply because (a) the purpose of giving seniors a room was to provide them with “health care services”, not to provide them with a place of residence; and (b) the payments it received from the Department of Health were payments in respect of the healthcare services offered to the seniors, not for their residential accommodations.

The Tax Court rejected these arguments, following the previous decision of High-Crest Enterprises Limited v. The Queen (2017 TCC 210), which involved similar facts and issues.  Since the Appellant agreed there was a self-supply under subsection 191(3) (which only triggers upon giving “possession or use of any residential unit in the complex” to another person), they had necessarily agreed that they had given the units to the seniors as a place of residence or lodging as contemplated by section 191.1.

The Tax Court also held that the Appellant received “government funding” for the complex, because a portion of the total funding was made for the purpose of making residential units in the facility available to seniors.  The Tax Court was only required to look at the purpose of “an amount” of money paid to the Appellant, not all money paid in respect of a variety of supplies (such as healthcare services) between the parties.


This decision demonstrates that in these sorts of real estate transactions, there are complex GST/HST issues that are often difficult for general practitioners to navigate — requiring specialized advice.  Builders should consult with experienced GST/HST professionals before undertaking such projects to ensure compliance and avoid costly assessments.

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