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Election that may be made by residential care facilities

New self-supply rules provided for by amendments to the Excise Tax Act and the Act respecting the Québec sales tax apply to builder-operators required to make a self-supply after February 26, 2008. The new rules also apply to builder-operators who reported the GST and QST for a self-supply made before February 27, 2008.

The election to adjust the net tax for the self-supply of a residential complex allows builder-operators of residential care facilities to adjust their net tax. To make the election, a builder-operator must not have reported, on or before February 26, 2008, any GST or QST for a self-supply of a residential complex or an addition to the complex.

A builder-operator may make the election, for example,

  • to claim input tax credits (ITCs), input tax refunds (ITRs) or a new residential rental property rebate (NRRP rebate) that the builder-operator was not previously allowed to claim, or
  • to make a future sale of the residential complex exempt from GST and QST.

Self-supply

Typically, the self-supply rules apply to a builder-operator of a residential care facility who builds or substantially renovates the facility, and transfers the possession or use of a room or suite in the facility under a lease for its residential use by an individual.

Before February 27, 2008, the self-supply rules may not have applied to facilities that provide nursing or personal care along with a room or suite.

Furthermore, builder-operators who have not reported consumption taxes for a self-supply made before February 27, 2008, may elect to have the self-supply rules apply. They may make an election to adjust their net tax for any reporting period that ends before February 27, 2010, provided the election is filed with the consumption tax return on or before the day the return must be filed for the period concerned.

Who may make the election?

You may make the election if you meet all of the following requirements:

  • You are not a cooperative housing corporation.
  • You are the builder of a residential complex (that is, a residential care facility) or of an addition to the complex.
  • You are entitled to an NRRP rebate in respect of one or more residential units (rooms or suites) in the residential complex or addition (or would have been entitled to such a rebate if the time limit for claiming it and the fair market value threshold of the unit(s) did not apply).
  • You are not a builder who sells residential units or leases the land portion of the residential complex or addition.
  • You would have been deemed to have made a self-supply of the residential complex or addition before February 27, 2008, as a result of leasing the complex, or a residential unit in the complex or addition, if the new self-supply rules had been in effect at the time.
  • You did not report the consumption taxes for a self-supply of the residential complex or addition in a return that was filed, or should have been filed, before February 27, 2008.
  • You did not sell the residential complex or addition to another person before February 27, 2008.
  • You have not made another election to adjust the net tax for the self-supply of this residential complex or addition.
  • The reporting period to which the election applies ends before February 27, 2010.

How to make the election

For the GST, complete form GST119, GST/HST Election to Adjust Net Tax for the Self-Supply of a Residential Complex. For the QST, make the election in a letter. Enclose the form and the letter with your GST and QST return for the reporting period to which the election applies. The election must be made on or before the day you are required to file your GST and QST return for the reporting period to which the election applies and for which you are claiming the adjustment of your net tax. The election cannot be revoked.

For more information, see GST/HST Info Sheets GI-045, Residential Care Facilities and Proposed Changes in the 2008 Budget, and GI-050, Residential Care Facilities and the GST/HST Election to Adjust Net Tax for the Self-Supply of a Residential Complex.

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