Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 248618
March 25, 2025
Dear [Client]:
Subject: GST/HST interpretation
Repayment of the purpose-built rental housing rebate
Thank you for your correspondence of [mm/dd/yyyy], concerning the repayment of a purpose-built rental housing (PBRH) rebate for […][Company A].
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The Government of Nova Scotia has proposed to decrease the rate of the HST from 15% to 14% effective April 1, 2025. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that [Company A] began construction of an apartment building on a parcel of real property located at […], […][City], Ontario (the Property) after September 13, 2023, that will be substantially completed in [yyyy]. The building will contain four residential units. Each residential unit in the building will contain private kitchen facilities, a private bath and a private living area. Each residential unit will be first used as the primary place of residence of individuals and those individuals will be required to enter into a one-year lease agreement in order to occupy the residential units. You have stated that the Property has a single legal land description that will meet all the conditions for the PBRH rebate and that [Company A] will meet its obligations as builder of the apartment building with respect to the self-supply of the Property.
RULING REQUESTED
You would like to know whether [Company A] will be required to repay the PBRH rebate if the Property including the building is sold within one year after the building has been occupied as a place of residence by individuals.
A ruling provides the Canada Revenue Agency’s (CRA) position on specific provisions of the legislation as these relate to a clearly defined fact situation of a particular person, and where all of the relevant facts and supporting documentation have been presented in writing. The CRA reserves the right not to issue a ruling where it considers that one would not be appropriate, such as where all transactions are not explicitly described or the request involves a matter that includes an alternative course of action. Therefore, we are issuing the following interpretation, which is a general explanation of the applicable provisions and how the legislation would apply.
INTERPRETATION GIVEN
Repayment of the PBRH rebate
Subsection 256.2(10) sets out the conditions under which a person may be required to repay a new residential rental property rebate (which also includes the PBRH rebate), in part, as follows:
“If a person was entitled to claim a rebate under subsection 256.2(3) in respect of a qualifying residential unit (other than a unit located in a multiple unit residential complex) and, within one year after the unit is first occupied as a place of residence after the construction or last substantial renovation of the unit was substantially completed, the person makes a supply by way of sale […] of the unit to a purchaser who is not acquiring the unit for use as the primary place of residence of the purchaser or of a relation of the purchaser, the person shall pay to the Receiver General an amount equal to the rebate […]”
[Emphasis added]
The following relevant definitions are found in subsection 123(1).
A multiple unit residential complex means a residential complex that contains more than one residential unit, but does not include a condominium complex.
A residential complex is generally defined to include that part of a building in which one or more residential units are located together with appurtenances and related land.
A residential unit includes a detached house, semi-detached house, rowhouse unit, or apartment that is occupied or is intended to be occupied by an individual as a place of residence or lodging.
The repayment rule in subsection 256.2(10) explicitly does not apply to a unit in a multiple unit residential complex. As the PBRH rebate is available only for units in a multiple unit residential complex, no repayment of the PBRH rebate would be required under subsection 256.2(10).
PBRH rebate
We are providing this information for ease of reference regarding the PBRH rebate.
Generally, the PBRH rebate is available to a builder of purpose-built rental housing for 100% of the GST or the federal part of the HST that is deemed to have been paid and collected by the builder on the self-supply of the property provided certain conditions are met.
One of the conditions is that, in accordance with subsection 256.2(3.1) and subsection 4(2) of the Real Property (GST/HST) Regulations (Regulations), the property the builder is deemed to have received must be a multiple unit residential complex where:
- the multiple unit residential complex includes at least four residential units and at least four of those units each contains private kitchen facilities, a private bath and a private living area, or at least ten residential units; and
- at least 90% of the residential units that form part of the multiple unit residential complex are qualifying residential units held for the purpose of making certain exempt supplies of the unit or making exempt supplies that include giving possession or use of a unit to a person for occupancy of the unit as an individual’s place of residence.
Another condition is that, generally, the construction of the purpose-built rental housing must begin after September 13, 2023, but before 2031 and must be substantially completed before 2036. For purposes of the PBRH rebate, the Canada Revenue Agency (CRA) generally considers construction to begin at the time when excavation work relating to a residential complex begins.
Where each of the four residential units in the multiple unit residential complex:
- contains private kitchen facilities, a private bath and a private living area,
- is a qualifying residential unit used for the purpose of leasing each unit to an individual as their place of residence for at least a year, and
- meets all other conditions for the PBRH rebate, including the timing of when the construction of the residential complex and is substantially completed,
a PBRH rebate may be available for the tax payable by the builder on the self-supply of the residential complex.
Further information on the PBRH rebate including the eligibility requirements is available in GST/HST Notice 336, Purpose-built Rental Housing Rebate.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 604-404-6231.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Denis Mazerolle
Rulings Officer
Real Property Unit 1
Financial Institutions and Real Property Division
GST/HST Rulings Directorate
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