A

The GST/HST payable by you on your last acquisition or importation of the property and for any improvements you made to it since it was last acquired

B

Any rebate or refund you were entitled to claim (or would have been entitled to claim if you had not been entitled to claim an input tax credit (ITC)) for the GST/HST payable on your last acquisition of the property and improvements you made to it since you last acquired it, but not including ITCs you were entitled to claim

C

The lesser of:

• 1
• The fair market value of the property at the time you made, or were deemed to have made, the taxable sale of the property divided by the amount payable (before tax) on your last acquisition of the property and for improvements you made to it since you last acquired it

A

The basic tax content of the real property at the time of the sale

B

The amount that would be the basic tax content of the property at the time of the sale, if it were determined without deducting any GST/HST you were exempt from paying under any other law or were entitled to recover by rebate, refund, remission or otherwise

C

The GST/HST payable on your sale of the real property, or the GST/HST that would have been payable on the sale had the property not been part of the supply of a business where no tax was payable because you and the purchaser made a joint election using Form GST44

You are an individual who is not a GST/HST registrant. You bought vacant land for $100,000 and you paid $5,000 GST. You later subdivide that land into four equal parts. All parts are of equal value and you sell one of these parts to an unrelated individual for $70,000. Your sale of that part of the land is taxable and the purchaser has to pay $3,500 GST ($70,000 × 5%).

Since you paid GST when you bought the land and the purchaser now has to pay GST on the part of the land that they bought from you, you can claim a rebate to recover some of the tax you paid when you bought the land.

You can recover only the amount of tax that can reasonably be considered as being for the part that you sold. Your rebate will be equal to the basic tax content of the part of the land that you sold or the amount of the tax payable on your sale, whichever is less.

You determine that $1,250 (which is one-fourth of the $5,000 tax you paid on your purchase of the land), can reasonably be considered as the amount of GST you previously paid for the part that you sold. Therefore, you determine the basic tax content of the part of the land that you sold as follows:

Basic tax content

• =equals(A – B) × C
• equals($1,250 – $0) × (the lesser of 1 and $70,000 / $25,000^{Footnote 1} )
• =equals$1,250 × (the lesser of 1 and 2.8)
• =equals$1,250 × 1
• =equals$1,250

As the basic tax content of the part of the land that you sold is $1,250, which is less than the $3,500 GST that was due from the purchaser on your sale of that part of the land, you can claim a rebate of $1,250.

You are a non-registrant and you built a house that you lease for long-term residential use by an individual. You paid tax on your costs to construct the house and on the land you purchased and you cannot recover any of that tax in some other way (for example by claiming a different rebate).

Under these circumstances, you are deemed to have made a taxable sale of the house and to have collected tax on that sale, when you first give possession or use of the house to the individual for long-term residential use. The tax you are deemed to have collected is calculated on the fair market value of the house at that point in time, and you must account for it on Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (Non-personalized).

You can claim this rebate to recover some or all of the GST/HST you paid on the land and to construct the house.

The amount of your rebate will be equal to the basic tax content of the house and related land at the time of your deemed taxable sale or to the amount of tax that you were deemed to have collected on your deemed taxable sale, whichever amount is less.

A municipality in Prince Edward Island is not a GST/HST registrant. It buys office furniture for $3,000 plus $450 HST from Huddle Inc. on October 20, 2022. It sells the furniture on December 9, 2022, for $1,200, collecting HST of $180. The furniture was used in providing exempt municipal services. The sale in December is taxable even though the municipality is not a GST/HST registrant.

The rebate available would be the lesser of the basic tax content at the time of the sale or the HST payable on the sale.

Basic tax content

(A – B) × C

($450 – $150) × $1,200 ÷ $3,000

$120

HST payable on the sale (15% of $1,200)

$180

Rebate

$120

The figure of $150 is the amount of the public service bodies' rebate (generally 100% for municipalities) for the federal part of the HST paid in this case. For details on how to apply for this other rebate, see Guide RC4034, GST/HST Public Service Bodies' Rebate.