When buying an acreage Canada Revenue Agency (CRA) has an administrative presumption that the land in excess of 1/2 a hectare (1.235 acres) is not reasonably necessary for the use and enjoyment of the building as a place of residence. In otherwords, CRA presumes that the excess land does not form part of the residential complex.
However, a taxpayer may be able to establish that the excess land is reasonably necessary for the residential building to properly fulfill its function as a residence. This requires that the excess land be more than simply desirable.
The prior use of the land is also critical in determining whether G.S.T. will be payable. Where the prior use was residential or maybe used as a hobby farm, then it appears that G.S.T. is not payable. If the prior use of the land was commercial, e.g. farming, then it appears that G.S.T. is payable by the Buyer.
For more information see:
Depending on the situation, Buyers and Sellers may want to agree in advance on the value of the land in excess of the 1/2 hectare or otherwise how they wish to apportion the G.S.T. Careful consultation should be had between the realtors and/or lawyers involved in the transaction.