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.
FROM: Lisa Papineau
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
TO: [Addressee]
FILE: 165597
SUBJECT: GST/HST INTERPRETATION
Prescribed form and prescribed information for the Ontario retail sales tax (RST) transitional new housing rebate
This memorandum is in response to your [correspondence] of [mm/dd/yyyy], and our telephone conversation of [mm/dd/yyyy].
All legislative references are to the Excise Tax Act (the Act) unless otherwise indicated.
[INTERPRETATION REQUESTED]
[…] a builder of new housing in Ontario has submitted multiple applications for the Ontario transitional new housing rebate (OTNHR) using Form RC7000-ON, Ontario Retail Sales Tax (RST) Transitional New Housing Rebate, in respect of its sales of new housing in Ontario to various purchasers. The builder, […] [indicates] that the OTNHR in each of these cases has been assigned to the builder by the purchaser. However, neither section F, “Certification”, nor section G, “Assignment of rebate”, of Form RC7000-ON were signed by any of the purchasers.
You request confirmation of the following:
1. The Canada Revenue Agency (CRA) should not process Form RC7000-ON filed in respect of a purchase of newly constructed or substantially renovated housing (new housing) in Ontario if section F, “Certification”, of Form RC7000-ON is not signed by the purchaser.
2. The CRA should not accept that a purchaser has assigned its OTNHR to a builder if the purchaser has not signed section G, “Assignment of rebate”, of Form RC7000-ON.
[INTERPRETATION PROVIDED]
We confirm the following:
1. The CRA should not process a Form RC7000-ON filed in respect of a purchase of new housing in Ontario if section F, “Certification”, of Form RC7000-ON is not signed by the purchaser and there is no evidence that the purchaser has otherwise certified the information in that section.
2. The CRA should not accept that a purchaser has assigned its OTNHR to a builder if the purchaser has not signed section G, “Assignment of rebate”, of Form RC7000-ON and there is no evidence that the purchaser has otherwise assigned the OTNHR to the builder.
[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(s) 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(s) or the additional information provided herein.]
ANALYSIS
Section 256.21 of the Act and section 56 of the New Harmonized Value-Added Tax System Regulations, No. 2, (Regulations) provide for an OTNHR to an individual who entered into a written agreement of purchase and sale, after June 18, 2009, for new housing in Ontario, where both ownership and possession of the housing were transferred after June 2010, and the construction or substantial renovation was at least 10% complete before July 2010.
Subsection 262(1) generally applies to require that a rebate under Division VI of the Act, under which section 256.21 falls, “shall be made in prescribed form containing prescribed information and shall be filed with the Minister in prescribed manner” (emphasis added). Subsection 297(1) requires that, on receipt of an application made by a person for a rebate under Division VI (e.g., an OTNHR), the Minister must, with all due dispatch, consider the application and assess the amount of the rebate, if any, payable to the person.
Further, subsection 256.21(6) allows an individual that purchased new housing in Ontario, and is entitled to claim an OTNHR in respect of that purchase, to assign the OTNHR to the builder. Subsection 256.21(7) requires that an assignment under subsection 256.21(6) “shall be made in prescribed form containing prescribed information and the form shall be filed with the Minister in prescribed manner ….” (emphasis added).
Prescribed form containing prescribed information
Under subsection 123(1), “prescribed” is defined, in part, to mean:
a) in the case of a form or the manner of filing a form, authorized by the Minister,
b) in the case of the information to be given on a form, specified by the Minister,
c) …
Form RC7000-ON is the form that is authorized by the Minister (i.e. the prescribed form) that must contain the information specified by the Minister (i.e., the prescribed information) for a person to make an application for an OTNHR under section 256.21 of the Act and section 56 of the Regulations.
Section F, “Certification”, of Form RC7000-ON, instructs that section F is “to be completed by … the purchaser for Type 2 or Type 3.” (Footnote 1) The purchaser’s signature, among other information, is required to be provided in Section F for that section to be completed. Therefore, the purchaser’s signature is prescribed information that the purchaser must provide on prescribed Form RC7000-ON.
Where the CRA receives a Form RC7000-ON application for an OTNHR in respect of the purchase of new housing by an individual, but the individual has not signed section F of that form, the application has not been “made in prescribed form containing prescribed information,” as required under subsection 262(1). In such a case, subsection 297(1) does not require the Minister to assess the amount of the rebate, but you are still permitted to assess the rebate in the circumstances.
Further, under Section B, “Property information”, of Form RC7000-ON, under “Type of application,” “Type 2” is described as an OTNHR claimed by a purchaser where the following applies:
“Rebate assigned to the builder – According to the assignment completed in Section G of this form, the purchaser assigns the rebate to the builder and the builder pays the amount of the rebate directly to the purchaser or credits it against the total amount payable for the house. The purchaser must complete and sign section G and give the completed application to the builder” (emphasis added).
Section G, “Assignment of the Rebate”, of Form RC7000-ON instructs that section G is “to be completed by the purchaser for Type 2 applications only if the purchaser wants to assign this rebate to the builder” (emphasis added). The purchaser’s signature, among other information, is required in Section G for that section to be completed. Therefore, the purchaser’s signature is prescribed information that is required to be provided in section G of prescribed Form RC7000-ON for an assignment under 256.21(6) to be “made in prescribed form containing prescribed information” as required under 256.21(7).
Where the CRA receives a Form RC7000-ON in respect of the purchase of new housing by an individual and the assignment of that rebate to the builder, sections F and G of Form RC7000-ON must both be signed by the individual. The CRA should not accept that an assignment of the OTNHR has occurred, or pay any amount of a rebate to a supposed assignee, unless both sections F and G are signed by the individual (or there is other evidence of the individual having certified the information in those sections) and the CRA is satisfied as to the validity of the assignment.
If you require further clarification with respect to this issue, please call me at 613-957-8222.
Lisa Papineau
FOOTNOTES
1 “Type 2” or “Type 3” refers to an application for an OTNHR filed under section 256.21 of the Act and section 56 of the Regulations where the purchaser either assigned the rebate to the builder or did not assign the rebate to the builder, respectively.
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