Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 117414
Attention: XXXXX
XXXXX
January 29, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
PROPOSED LAW/REGULATION
GST/HST New Housing Rebates under the HST in Ontario
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to new housing in Ontario.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
The Government of Canada and the Government of Ontario have signed a Comprehensive Integrated Tax Coordination Agreement on the implementation of the HST in Ontario. The HST will come into effect on July 1, 2010, at a rate of 13%, consisting of a 5% federal part (equivalent to the existing GST) and an 8% provincial part.
Legislation required to implement the HST in Ontario was introduced in the Parliament of Canada and the Legislative Assembly of Ontario and has received Royal Assent. However, many of the rules which would apply to transactions that straddle the July 1, 2010 implementation date will be contained in regulations made under the ETA. Although the Government of Ontario has announced details of the rules which may eventually apply, the required regulations have not yet been made.
The following interpretation is based on the rebate and transitional rules for the HST in Ontario as announced in Information Notice No. 2, Helping Homebuyers and the Housing Industry with an Enhanced New Housing Rebate, a New Rental Housing Rebate and Transitional Rules, released by the Ministry of Revenue, Government of Ontario in June 2009.
You are enquiring as to the calculation of the consideration, the HST payable, the GST/HST new housing rebate, the proposed Ontario new housing rebate and the proposed Retail Sales Tax (RST) transitional new housing rebate in respect of the following scenario:
• At some time after June 18, 2009, an individual enters into a written agreement of purchase and sale with a builder for the sale of a newly constructed single unit residential complex (building and land). The residential complex will be situated in Ontario. We will assume that the residential complex is not a mobile home or modular home.
• The residential complex will be occupied as a primary place of residence of the individual or a relation of the individual. We will assume that the remaining conditions for claiming a GST/HST new housing rebate as set out in paragraphs 254(2)(a) through (g) are met.
• The selling price for the residential complex is $400,000. The selling price includes the HST at 13%, the GST/HST new housing rebate, the Ontario new housing rebate and the RST transitional new housing rebate.
• Possession and ownership of the residential complex transfer to the individual after June 30, 2010.
• Construction of the residential complex is 70% complete as of July 1, 2010.
Interpretation Requested
You are requesting confirmation of the following:
• the consideration payable for the residential complex is $383,139.53;
• the HST payable is $49,808.14;
• the GST/HST new housing rebate is $4,212.21;
• the Ontario new housing rebate would be $22,988.37; and
• the RST transitional new housing rebate would be $5,747.09.
Interpretation Given
Based on the information provided, we confirm that the amounts set out in your interpretation request are correct.
As the written agreement of purchase and sale for the single unit residential complex was entered into after June 18, 2009 and ownership and possession of the complex transfer after June 30, 2010, the HST at 13% will apply to the sale of the complex.
As the consideration paid for the residential complex exceeds $350,000, the GST/HST new housing rebate amount is reduced, based on the formula provided in subsection 254(2).
The Ontario new housing rebate would be equal to 75% of the provincial part of the HST paid, to a maximum rebate amount of $24,000.
The RST transitional new housing rebate, where construction of the residential complex is 70% complete as of July 1, 2010, would be equal to 75% of the estimated RST in the complex. Where the estimated RST in the complex is based on the consideration payable for the residential complex, the estimated RST would be equal to 2% of the consideration.
The foregoing comments represent our general views with respect to the Ontario new housing rebate and the RST transitional new housing rebate as announced in the aforementioned Information Notice No. 2 as it relates to the subject matter of your request. Any change to the wording of the rebate or transitional rules or any regulations regarding the HST in Ontario, if made, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretation Service, do not bind the CRA with respect to a particular situation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4393. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Hugh Dorward
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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