CRA defines the meaning of “substantially complete” in a UHTA context
UHTA s. 6(7)(k) exempts a person who is not an excluded owner from tax respecting a residential property held at the end of a calendar year where “the construction of the residential property is not substantially completed before April of the calendar year.”
CRA indicated that it may use its GST/HST guidelines in determining when construction of a residential property is substantially completed for UHTA purposes. It stated:
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.
S. 6(7)(l) provides an exemption where “the construction of the residential property is substantially completed in January, February or March of the calendar year, the residential property is offered for sale to the public during the calendar year and the residential property had never been occupied by an individual as a place of residence or lodging during the calendar year.” CRA indicated that this exemption would apply in the following simple example:
- 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.