CRA concludes that GST/HST should be backed out of the appraised value of newly constructed residence for GST/HST self-assessment purposes

ETA s. 191(3) requires the builder of a multiple unit residential complex to self-assess itself for GST/HST on the fair market value of the complex at the later of substantial completion and first occupation by a tenant, and a similar rule applies to other residential complexes. CRA has now accepted that the appraised value in this context should be treated as including GST/HST, and that such GST/HST should be backed out before determining the amount of GST/HST payable by the builder. This FMV reduction thus will reduce the self-assessed GST/HST (and any associated new residential rental property rebate).

Neal Armstrong. Summary of CRA internal communiqué dated May 17, 2023 “Updated guidance relating to embedded amount of GST or HST in Fair Market Value (FMV) under the Excise Tax Act (ETA) as it pertains to New Residential Housing” as described in PwC, “Tax Insights: Canada Revenue Agency confirms that fair market value of newly constructed residential complexes includes GST/HST,” Issue 2024-10, 22 March 2024 under ETA s. 191(3).