Underused Housing Tax Notice UHTN13 Exemptions for New Residential Properties February 2023

Application of GST/HST guidelines on meaning of “substantial completion”

What is substantial completion

… The … CRA … has guidelines and criteria under the goods and services tax/harmonized sales tax (GST/HST) to determine when construction is substantially completed. Similar guidelines and criteria may be used for the underused housing tax.

Generally, substantial completion of a residential property means that construction is at a stage of completion (generally 90% or more) that allows an individual to reasonably inhabit the property. A residential property is considered to be substantially completed even if there are outstanding minor repairs, adjustments or upgrades, since this will not reasonably impair the use and enjoyment of the property as a place of residence.

Example 2

• C and D (who are not citizens or permanent residents) together own all the shares of a Canadian corporation which had substantially completed constructing detached homes in Canada in March 2022.
• Although the homes had been offered for sale to the public from shortly after the commencement of construction, they were still unsold on December 31, 2022.
• The s. 6(7)(l) exemption would apply (although the corporation, as the registered owner, would be required to file a return).