The Tax Issue:
I am the treasurer of a charitable organization that sells burial plots to individuals. Do I charge the GST on these sales?
The Goods and Services tax and, depending on your province of residence, the Harmonized Sales tax or Quebec Sales Tax are levied on all supplies of property or services rendered in Canada, unless they fall in to one of a myriad of exemptions, exceptions or exclusions.
A quick check of the law shows that there is a special section of exemption for supplies by registered charities. However, these exemptions come with a long list of exceptions. So, if you’re following along, everything is taxable, unless it’s exempt. Everything supplied by a charity is exempt, unless it is not exempt.
A supply of real property by way of sale is an exception to the registered charities exemption, so it’s taxable. The charity must charge the GST on the sale.
The question you must ask, therefore, is whether the sale of a burial plot is really a sale of real property for purposes of the GST. Is there a transfer of title to the property? Is the burial plot provided for a limited period of time, say 99 years, or in perpetuity?
If, according to the terms of the contract, the provision of the plot can be viewed as lease, licence or similar arrangement, then it would be exempt from GST.