HST on Blue Mountain Resort Chalets: What Buyers Need to Know When Purchasing Through a Corporation

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Buying a chalet at Blue Mountain Village can be an exciting investment opportunity, especially when the property is part of the resort’s rental-pool program. However, purchasers, especially corporate buyers, are often surprised to learn that HST may apply even on resale. This outcome depends entirely on how the property is classified under the Excise Tax Act (Canada) (“ETA”) and whether the unit is considered a residential complex or a commercial short-term accommodation unit.

At Rabideau Law, we regularly advise buyers, sellers, and developers on HST treatment of resort properties, rental pool arrangements, and mixed-use real estate. The Blue Mountain chalet market has its own unique structure, and understanding the HST rules can prevent costly surprises on closing.

1. Why Many Blue Mountain Chalets Are Not “Residential Complexes”

Under Schedule V, Part I, section 2 of the ETA, the sale of a used residential complex is normally exempt from HST. This is why regular resale homes and condos in Ontario are not subject to HST on the purchase price.

However, “residential complex” is defined very narrowly under ETA s. 123(1), and several exclusions apply. In particular:

A unit is not a residential complex if it forms part of a hotel, motel, inn, boarding house, lodging house, or similar premises that provides temporary or short-term accommodation to the public.

Blue Mountain chalets that are subject to mandatory participation in the resort rental pool, nightly rental management, and restrictions on owner use frequently fall into this excluded category.

Mandatory rental = Not a residential complex

CRA Policy Statement P-099R (“Hotel Condominium Units”) confirms:

Where condominium units are part of a hotel-type operation and must participate in a rental pool with centralized management, the sale of such a unit, including on resale, is a taxable supply, not an exempt residential sale.

This means the unit is legally treated as commercial lodging, not a home.

2. Why HST Applies on Resale in These Developments

If the unit is not a “residential complex,” then the default rule under ETA s. 165 applies:

All taxable supplies of real property are subject to HST at the applicable rate (13% in Ontario).

Therefore, in Blue Mountain developments where rental participation is mandatory (e.g., certain condo-hotel buildings or resort-managed chalets), HST is charged on the sale price,  even if:

  • it is not new construction;
  • the property has been previously occupied;
  • it is being resold by a non-builder;
  • the buyer is a corporation or an individual.

This catches many purchasers off guard because most Ontario residential resales are HST-exempt. Resort properties are a completely separate category.

3. Common Blue Mountain Indicators That Trigger HST

A chalet may be classified as commercial short-term accommodation if any of the following apply:

  • The unit must be placed in the resort’s rental pool, even if only for a minimum number of nights.
  • The resort controls nightly rental rates, housekeeping, and guest services.
  • The zoning is for transient accommodation, not long-term residential use.
  • The unit must meet resort furnishing, décor, and hotel-style standards.
  • The resort prohibits full-time or year-round owner residency.

In these cases, CRA considers the unit part of a hotel-type operation, not a residential property.

4. What Happens When a Corporation Purchases the Chalet

If a corporation purchases a mandatory-rental chalet:

HST is typically payable on the purchase price

The APS should specify whether the price is:

  • Plus HST,
  • HST included, or
  • Whether the buyer must self-assess under ETA s. 191 (rare but possible depending on past ownership).

The corporation may claim 100% Input Tax Credits (ITCs)

Because the chalet is used in a taxable commercial activity (short-term rentals < 30 days), the corporation can generally claim full ITCs for:

  • HST on the purchase price
  • HST on furniture, repairs, supplies, resort fees, and marketing
  • HST on property management services

This transforms what initially appears as an additional tax burden into a recoverable cost.

Registration for GST/HST is required

Before closing, the corporation should register for GST/HST to avoid timing delays and to ensure a clean ITC claim.

5. What About Owner Use?

Owner-use rights (e.g., 14 days per year) do not necessarily affect the commercial classification provided that rental participation is mandatory and the dominant use is short-term accommodation.

However:

  • If the owner begins using the unit primarily for personal use,
  • Or removes it from the rental pool (if even permitted),

then change-of-use rules may apply, triggering:

  • self-assessment of HST on fair market value (ETA s. 191),
  • loss of ITCs,
  • or the need to repay previous ITCs.

Proper structuring is essential.

6. Can HST Ever Be Avoided on These Units?

Yes, but only in limited scenarios:

  • If the seller previously self-assessed HST on a change-of-use and the unit is now used exclusively as commercial accommodation, the resale may be structured as HST included.
  • If the seller never claimed rebates or ITCs, the typical builder-style self-supply rules may already have been triggered.
  • Some APS contracts allow the purchaser to self-assess instead of paying HST to the seller, which improves cash flow and defers remittance.

Each development at Blue Mountain is different, and the APS language must be reviewed carefully.

7. Practical Guidance for Buyers

Before signing an APS for a Blue Mountain chalet, corporate buyers should:

1. Review the development’s rules

Determine whether the unit falls into:

  • residential,
  • mixed-use, or
  • commercial hotel-type classification.

2. Obtain the seller’s HST history

Ask:

  • Was HST paid on acquisition?
  • Were ITCs or rental rebates claimed?
  • Has the seller performed a self-assessment?

3. Register the corporation for HST

This ensures ITCs can be claimed and avoids unnecessary delays.

4. Confirm APS drafting

Ensure the HST clause is correct and protects the buyer.

5. Plan for cash-flow

If HST must be paid on closing, consider whether:

  • HST can be self-assessed instead; or
  • A holdback is appropriate if the seller’s HST position is uncertain.

Conclusion

Not all chalets at Blue Mountain are treated as residential properties. Where the unit must participate in the resort’s rental program, the CRA classifies it as commercial short-term accommodation, not a “residential complex.” As a result, HST applies even on resale, but corporate buyers can typically recover the entire amount through input tax credits.

Understanding these rules is crucial for avoiding unexpected tax liabilities and ensuring the transaction is structured efficiently.

If you are purchasing a resort property, whether at Blue Mountain or elsewhere in Ontario, Rabideau Law can review the agreement, identify HST risks, and structure the transaction to protect your interests and maximize recoverable tax benefits.

Beyond the Status Certificate: How Top Realtors Protect Clients with Informed Insight

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A collaborative approach to due diligence in Ontario’s condominium market

In Ontario’s condominium market, few documents are as important or as misunderstood such as the Status Certificate.

For experienced real estate professionals, it’s far more than a checklist item before firming up a deal. It’s a sophisticated due diligence tool that reveals how a building is managed, funded, and legally positioned.

The best agents understand that their credibility rests not only on finding the right property but on ensuring their clients fully understand what they’re buying and what liabilities may follow them after closing.

Realtors as Trusted Advisors

The most effective realtors recognize that protecting their clients’ interests extends beyond market insight and negotiation. It involves knowing when to bring in specialized legal expertise to interpret the finer details of a Status Certificate.

At Rabideau Law, we view these professionals as partners and not just referral sources. Together, we form a due diligence team where the realtor’s deep market knowledge complements the lawyer’s legal and financial analysis.

What We Examine in a Status Certificate

A comprehensive review goes beyond confirming that common expenses are current. We look at the underlying structure of the corporation and how its financial, legal, and governance elements interact.

Corporate Liabilities, Indemnities, and Legal Proceedings

Status Certificates often disclose indemnities or obligations that “run with the property,” meaning future owners inherit the responsibility through their share of the common expenses. These can arise from service contracts, developer obligations, or third-party agreements. Understanding them is key to protecting buyers from long-term exposure.

Compliance Orders and Regulatory Obligations

Fire code, building code, or municipal compliance orders can remain attached to the property; even after years,  leading to potential repair or upgrade costs for owners.

Audited Financial Statements and Reserve Fund Management

A disciplined review compares the corporation’s actual financial results with the engineer’s projected funding requirements. The goal isn’t simply to confirm the reserve fund balance, but to assess how accurately the corporation has followed its financial plan.

Reserve Fund Studies and Governance

The engineer’s 30-year plan is only as strong as the corporation’s adherence to it. When a condo consistently underfunds its reserve, owners will eventually bear the cost through special assessments or fee increases.

How Corporations Handle Unforeseen Costs

Even responsible corporations face surprises. When they do, their financial strategy usually falls into one of three categories:

  1. Raising Monthly Common Expenses (Condo Fees) – Transparent and sustainable; reflects proactive management.
  2. Levying Special Assessments – Necessary when reserve funds are insufficient to cover urgent capital needs.
  3. Obtaining Bank Financing – Spreads costs over time but increases long-term obligations borne by owners.

Understanding which path a corporation has chosen helps realtors assess its long-term stability and financial prudence.

The “Marketing” of Condo Fees

Condo fees are often used as a marketing tool. Some corporations keep fees artificially low to attract buyers, while others maintain modest, predictable annual increases to reflect true costs.

Experienced realtors know that low fees don’t always equal value. Consistent funding practices signal a well-managed property, often saving owners from unexpected assessments later.

Benchmarking and Comparative Insight

With over 4,200 Status Certificates reviewed, Rabideau Law maintains one of the most comprehensive internal databases of condominium corporations in Ontario.
This allows us to benchmark patterns in:

  • Reserve fund adequacy relative to building age
  • Frequency of special assessments
  • Presence of legal proceedings or indemnities
  • Long-term funding consistency against engineering forecasts

These insights provide context that can’t be seen by reviewing a single certificate in isolation.

Realtors as Protectors of the Transaction

Top realtors don’t just close deals they protect clients through diligence, foresight, and collaboration.
By pairing their expertise with informed legal review, agents can provide unmatched value: ensuring that clients’ investments are sound and free from avoidable risk.

Together, we ensure that every purchase is not just successful, but sustainable.

Final Thought

A Status Certificate tells the story of how a building has been governed, funded, and maintained.
Realtors who understand its significance and who partner with experienced legal professionals elevate both their service and their clients’ confidence.

At Rabideau Law, we’re proud to work alongside Ontario’s real estate community, providing data-driven, practical insight into Status Certificates that safeguards every transaction.

Mutual Fund Trusts in Canada

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A Powerful Structure for Private Capital, Real Estate Funds & Development Projects

Mutual Fund Trusts in Canada have become one of the most powerful and flexible structures for private capital formation, particularly in the real estate and development sectors. As private lending, real estate investment, and alternative fund strategies continue to grow across Canada, developers, fund sponsors, and private lenders are seeking structures that support efficient capital raising, investor scalability, tax efficiency, and long-term asset planning. The Mutual Fund Trust (MFT) has emerged as a premier vehicle that satisfies these objectives while providing access to a significant pool of registered-plan capital, including RRSPs, TFSAs, RRIFs, and other tax-advantaged investment accounts.

A Mutual Fund Trust is a specialized trust established to pool capital from multiple investors, who subscribe for units in the trust rather than shares in a corporation. Once it satisfies the qualification conditions under the Income Tax Act, an MFT enjoys favourable tax treatment, including the ability to deduct amounts distributed to unitholders so that income flows directly to investors without entity-level tax. This “flow-through” tax treatment, combined with the ability for capital gains to retain their character when distributed, provides meaningful tax efficiency that is difficult to achieve in traditional corporate structures. It also allows for smoother distribution planning and greater alignment between investor expectations and fund performance.

The MFT structure is widely recognized and trusted within Canada’s capital markets. Investors, accountants, wealth advisors, and institutional-level capital partners are familiar with MFTs, which increases investor confidence and enhances marketing success. Moreover, once qualifying criteria are met, the structure can accept investments from registered accounts, unlocking retirement capital that is not typically available to limited partnerships or many corporate fund vehicles. For developers and fund sponsors seeking to expand beyond traditional equity partners or relying solely on institutional capital, this access offers a major strategic advantage.

To qualify and maintain MFT status, the trust must be resident in Canada and generally must become widely-held within its first taxation year, commonly by achieving at least 150 unitholders unless structured under specific early-stage exemptions. Units are typically issued under securities exemptions such as the offering memorandum exemption, the accredited investor exemption, or the friends-and-family/business associate exemption. A properly drafted trust agreement, trustee oversight, securities compliance, investor subscription documentation, and annual reporting obligations are essential components of a compliant structure.

Mutual Fund Trusts have become particularly attractive in the real estate development space. They are highly effective for land development vehicles, build-to-rent and multi-unit residential development programs, multi-phase development pipelines, and strategies combining construction income with long-term stabilized rental income. Unlike a single-purpose corporation or limited partnership that may be constrained to a specific project or tax treatment, an MFT can raise capital on a continuing basis, distribute returns during the construction phase if appropriate, and continue holding income-producing assets following stabilization. This continuity allows developers to use one vehicle through the entire development lifecycle: acquisition and planning, construction, lease-up and stabilization, refinancing, and long-term ownership or disposition. The flexibility to collect income, distribute returns, and retain assets under one legal and tax structure makes MFTs especially valuable for developers building scaled platforms or recurring investment programs.

From a tax and structural standpoint, an MFT compares favourably to other investment vehicles. Limited partnerships remain useful for certain development sponsor arrangements and carried-interest structures, and corporations continue to have a role in operating businesses and asset ownership entities. However, these vehicles generally lack the investor accessibility, unit-based structure, registered-plan eligibility, and tax-flow benefits offered by an MFT. Many sophisticated funds combine an MFT at the top level with corporations or LPs beneath it to execute development projects efficiently, balancing tax planning, risk management, and capital strategy.

Like any sophisticated investment structure, establishing and administering an MFT requires careful attention to trust law, securities regulation, tax rules, investor documentation, disclosure requirements, trustee duties, and ongoing compliance. A properly structured MFT includes a comprehensive trust deed, offering memorandum or exempt distribution documentation, investor subscription agreements, and proper administrative systems. Failure to structure the trust correctly, satisfy qualification criteria, or comply with securities obligations can jeopardize its tax status and result in regulatory or investor issues.

For developers, private lenders, real estate investment sponsors, and private equity managers seeking a scalable, investor-friendly, and tax-efficient structure, the Mutual Fund Trust stands out as one of the most effective fund vehicles available in Canada. It is uniquely suited to support real estate development portfolios, recurring lending strategies, multi-asset funds, and long-term wealth creation platforms while offering access to registered investment capital and preserving tax efficiency for investors.

Rabideau Law assists developers, fund operators, private capital sponsors, and family investment groups in designing, structuring, and launching Mutual Fund Trusts and related investment vehicles. Whether you are building a development fund, transitioning from an LP or corporate model, seeking to scale your investor base, or establishing a long-term real estate investment platform, we provide tailored legal guidance to help you build a compliant, tax-efficient, and investor-ready structure. To discuss whether a Mutual Fund Trust is the right vehicle for your investment strategy, contact our office to schedule a consultation.