16 October 1998 GST/HST Interpretation HQR0001369 - New Housing Rebate for Individual Builder

                                                                        GST/HST Rulings and Interpretations
 Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX                                                                                 K1A 0L5

Dear Sir:

Thank you for your facsimile of October 8, 1998 concerning the application of the Goods and Services Tax (GST) insofar as an entitlement to a GST/HST New Housing Rebate based upon the scenario provided below. We will not address any Harmonized Sales Tax considerations in this letter.

Statement of Facts

Based upon the information provided it is our understanding that:

•   an individual acquires land,

•   constructs a single unit residential complex (complex) thereon in the course of the individual's business,

•   claims input tax credits for GST paid of $4,200 on the taxable costs totaling $60,000 related to the acquisition of the land and construction of the complex,

•   occupies the complex as a primary place of residence following substantial completion of the complex, and

•   remits the GST payable arising from the self-supply of the complex.

Interpretation Requested

You have asked for the Department's opinion as to the applicable GST/HST New Housing Rebate calculation based on the above Statement of Facts.

Interpretation Given

Based on the information provided it is the Department's view that the individual would be entitled to a GST/HST New Housing Rebate under section 256 of the Excise Tax Act (ETA) provided all of the conditions of that section of the ETA are met.

It is the Department's position that the "total tax paid by the particular individual" as referred to in paragraph 256(2)(c) of the ETA would be, in cases such as this, the tax which the particular individual was deemed to have paid under subsection 191(1) of the ETA.

Since in this case the fair market value of the completed complex is $100,000 and the GST paid arising from self-supply of the complex is $7,000, the GST/HST New Housing rebate is calculated as in accordance with subsection 256(2) of the ETA follows:

Where the fair market value of the substantially completed complex is less than $350,000, the lesser of:

•   $8,750, and

•   36% of $7,000 (being the total tax paid).

The total GST/HST New Housing Rebate amount is therefore $2,520.

The foregoing comments represent our general views with respect to the subject matter of your facsimile. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-8852.

Yours truly,

Daryl Hooley
Real Property Unit
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate

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