A mixed-use building makes two supplies for GST/HST purposes, not one. The apartments are an exempt supply and carry no tax. The storefront is a taxable supply and does. CRA Memorandum 19.4.1 puts it directly: where a property is part residential complex and part commercial, the supply is treated as two separate supplies. One address can sit inside the tax system for part of its income and outside it for the rest.
That split drives everything else. Set it up in this order.
Step 1: Split the rent roll into two columns
Residential rent is exempt when the unit sits in a residential complex and goes to an individual as a place of residence for a period of continuous occupancy of one month or more. That is the test in Memorandum 19.2.2, and two details in it move units between your columns.
Occupancy under one month is not covered by that exemption, which is where a furnished suite rented by the week lands. Separately, any rental of a residential unit at $20 a day or less is exempt however long it runs. Parking is exempt where the space forms part of the residential complex, or where you supply the unit as well as the space. Rent a space to someone who does not rent from you and it is taxable.
Everything commercial goes in the other column. A lease, licence or similar arrangement for commercial real property is taxable unless something specifically exempts it. That reaches the storefront, an office, storage rented to a business, a rooftop antenna site and public parking.
Step 2: Total the taxable column, and only that column
The small supplier threshold is $30,000 in taxable supplies over four consecutive calendar quarters. Exempt residential rent is not a taxable supply, so it never counts. A building collecting $420,000 a year from apartments and $26,000 from the ground floor unit is still a small supplier, assuming no other taxable revenue.
The crossing date matters more than the total. If one supply pushes you past $30,000 inside a single calendar quarter, registration takes effect no later than the day of that supply. If you cross gradually across four quarters, you stop being a small supplier at the end of the month following the quarter in which you crossed, and registration takes effect no later than the day of your first supply after that. Work out which case a new commercial lease puts you in before you sign it.
Below the threshold you can still register voluntarily, usually effective the day you request the account or up to 30 days earlier. The reason to do it is the next section: a small supplier collects no tax, and also recovers none of the tax it pays.
Step 3: Register, then pick the reporting period on purpose
Reporting periods are assigned by annual taxable supplies. At $1.5 million or less you are put on annual filing and may elect monthly or quarterly. Above $1.5 million up to $6 million you are quarterly and may elect monthly. Above $6 million you are monthly with no choice. The thresholds are set out in RC4022.
Most mixed-use owners land in the first band. Annual filing suits a year where you collect more tax than you pay. It is the wrong call in the year you fit out a commercial unit, because a large input tax credit sits with the government for up to twelve months before you file for it. Elect quarterly for that year and the refund comes back sooner.
Step 4: Rebuild the commercial rent invoice
Your commercial tenant claims its own input tax credit on the rent it pays you, and it can only do that if your invoice carries the required information. The Input Tax Credit Information Regulations set what is required in three tiers: under $100, $100 to under $500, and $500 or more.
Monthly commercial rent is over $500 almost everywhere, so build the template to the top tier and stop thinking about it. That tier needs your name, the invoice date, the total, your GST/HST registration number, the tax amount or a statement that tax is included with the rate applied, the tenant's name, the terms of payment, and a description good enough to identify the supply.
One trap: older guidance still shows the tiers as $30 and $150. The regulation in force uses $100 and $500. Put your registration number in the lease and in the invoice template rather than typing it each month, because a missing number is the item tenants call about.
Step 5: Sort every expense into three piles
Input tax credits follow use, so each cost lands in one of three piles.
- Clearly commercial. The storefront rooftop unit, a leasing commission on the retail space. Full credit.
- Clearly residential. Repainting a suite, the corridor carpet. No credit.
- Shared. The roof, snow removal, common area hydro, the management fee, the insurance premium. Apportion.
RC4022 sets the shape of the shared pile: claim the full credit where substantially all of the use, meaning 90 per cent or more, is in commercial activity, claim none where substantially all of the use is not, and otherwise apportion and claim only the commercial part.
Pick the basis before your first claim rather than at year end. For a building, floor area is the usual choice and it is easy to defend. Whatever you pick has to be reasonable and you have to keep using it. Write the percentage and the basis down, because in three years nobody will remember how 22 per cent was arrived at.
Step 6: Write the next lease so the tax is its own line
Quote base rent and tax separately in the lease and on every invoice. A single all-in number invites an argument later about whether tax was inside it, and that argument tends to surface at a renewal or a sale.
Operating cost and tax recoveries billed to a commercial tenant generally form part of what you charge for a taxable supply, so the year end adjustment carries tax the same way base rent does. Build that into the order you reconcile in, rather than bolting it on after the number has gone out.
What this leaves you with
Two columns on the rent roll, a registration date you chose rather than discovered, an invoice template a tenant can file without calling you, and an allocation percentage written down with its basis. None of it is hard to do now. All of it is much harder to reconstruct two years later, from bank statements and memory.