0240-R1 R.J. Macdonald (613) 995-1723
DEC 4 1981
Dear Mr. Bortolussi:
Re: Multiple-Unit Residential Buildings
This letter is in reply to your request of November 6, 1981, in which you posed several questions concerning the certification of recreational properties as Multiple-Unit Residential Buildings (MURB).
You suggest that buildings which will have multiple owners acquiring rights to use units for limited periods on a "time sharing" basis are not eligible for MURB certification. We agree with this suggestion.
It is your opinion that buildings with units to be "rented" on 5 to 7 day packages are not eligible for MURB certification. We agree with your position.
For buildings that will be rented to employees working at a resort area you are prepared to issue MURB certificates. Provided that at least 80% of the units in the subject building are to be rented to individuals employed on an ongoing basis (i.e. not part-time) at the resort area it is our opinion that a MURB certificate should be issued.
You expressed concern over the possibility of a building's use changing from residential to non-residential subsequent to certification. This contingency need not be a concern of Canada Mortgage and Housing Corporation ("CMHC"). Whether a MURB certificate should be issued or not depends on the intended future use of the building as known to CMHC at the time the application is completed. Any information that might come to CMHC's attention concerning certified buildings that are not being used for residential purposes might be forwarded to the attention of the director of the applicable District Taxation Office who would be able to deny class 31 status to its owners, notwithstanding its certification.
You have stated that it is difficult for CMHC to determine the intended occupancy of a building prior to its occupation in those instances when the building is located at or near a resort area. As inferred earlier, if the applicant alleges that the building will be used for residential purposes, then the MURB certificate should be issued if the time frame for the laying of the footings is correct. Your suggestion that such certificates bear the phrase "resort area" in a conspicuous part of the certificate seems to be a good one.
You are concerned about the definition of the term "domestic establishment" and what time frame constitutes a more or less permanent basis as the phrase "on a more or less permanent basis" is used in paragraph 7 of IT-367R2 .
A self-contained domestic establishment is defined at subsection 248(1) of the Income Tax Act and "means a dwelling house, apartment or similar place of residence in which a person as a general rule sleeps and eats". Residence is defined in the Concise Oxford Dictionary as being one's home or permanent dwelling. The reason for the inclusion of "more or less" in the phrase "on a more or less permanent basis" in paragraph 7 of IT-367R2 was to avoid the sense of an indefinite period of time that one gets from the dictionary definition of the word permanent.
There is no established time frame beyond which it can be said that a building will be said to provide, on a more or less permanent basis, the place of residence or abode of its occupant. Each will require a judgment call, but we feel that it is sage to say that a period of one month or less would not be sufficient.
Yours truly,
for Corporate Rulings Division Legislation Branch