Commercial leases

Generally, commercial leases from a landlord who is registered for the GST/HST are taxable.

Property taxes paid by a tenant are to be treated as part of the payment to the landlord for the rental of the real property, even if the tenant pays the taxes directly to the municipality. Therefore, the amount of property taxes payable by a tenant is considered to be part of the rent and is subject to GST/HST in the same way as the amount of rent payable by the tenant.

The landlord must collect and remit the GST/HST on the value of the property taxes, even if the municipality bills the tenant directly. This will be the case whether or not the rental agreement states that the payment of property taxes by the tenant is to be considered as "rent" or "additional rent."

Forms and publications

• GST/HST Memoranda Series, 1 9-4-1 Commercial Real Property - Sales and Rentals