Elimination of the HST in British Columbia: Builder Information Requirements for the Transition Period

GST/HST Info Sheet GI-132
December 2012

This info sheet explains the written information that a vendor (including a builder or an agent of the builder) must provide to a purchaser of new housing, or an interest in such housing, in B.C. where:

• a written agreement of purchase and sale for the housing or interest is entered into on or after February 17, 2012 and before April 1, 2015, ^{Footnote 1} or
• in any event, where the B.C. transition tax is payable in respect of the sale of the housing or interest.

Definitions for GST/HST purposes, e.g., builder, residential complex, residential unit and substantial renovation, will continue to apply under the GST and PST system, as will the CRA's current policies on the application of the GST/HST to housing. The following CRA publications discuss many of these terms and concepts: Guide RC4052, GST/HST Information for the Home Construction Industry and GST/HST Info Sheet GI-005, Sale of a Residence by a Builder Who is an Individual.

New housing

The terms "new house" and "new housing" used throughout this info sheet refer to newly constructed or substantially renovated housing supplied by a builder. Housing that has been substantially renovated is generally given the same treatment under the GST/HST as newly constructed housing. For a full explanation of the factors to consider in determining if a substantial renovation has taken place, refer to GST/HST Technical Information Bulletin B-092, Substantial Renovations and the GST/HST New Housing Rebate.

Written information that a vendor must provide to a purchaser of new housing or an interest in new housing

Where a written agreement of purchase and sale for new housing, or an interest in such housing, is entered into on or after February 17, 2012 and before April 1, 2015, the vendor must provide specific written information to the purchaser. In some cases, this information must be provided in the written agreement of purchase and sale while in other cases, the information must be provided in a written addendum to the agreement.

In addition, regardless of the date on which the written agreement of purchase and sale is entered into, if the B.C. transition tax is payable on the sale of new housing or an interest therein, other specific information must be provided to the purchaser in the statement of adjustments or other similar document.

Where the information must be provided in the statement of adjustments or similar document, the information can be provided in any statement of adjustments as long as it is provided at or before the time at which tax becomes payable. ^{Footnote 2} It is expected that the information will typically be provided in the statement of adjustments signed by the vendor and returned to the purchaser.

There may be cases where there is no statement of adjustments or where the information must be provided before the statement of adjustments is prepared. For example, if possession of taxable new housing transfers earlier than ownership transfers (and possession transfers on or after April 1, 2013 and before April 1, 2015), the B.C. transition tax would generally become payable at the time possession transfers. In such a case, the builder must provide the information to the purchaser at the time tax becomes payable, e.g., generally at the time possession transfers, which may be earlier than when a statement of adjustments would normally be prepared.

The information that the vendor must provide is as follows:

A. Written agreement of purchase and sale entered into on or after December 1, 2012 and before April 1, 2015

In these cases, the vendor is required to include in the written agreement, on the date the agreement is entered into, each of the following items:

• the value of consideration for the housing or interest therein as established for GST/HST purposes;
• a statement as to whether the amount represented in the agreement as the purchase price includes any of the B.C. transition tax, the GST or the HST and, if the purchase price includes any such tax, a statement that identifies each such tax, the rate of the tax and the amount of the tax;
• if a GST/HST new housing rebate, B.C. provincial new housing rebate or B.C. transition rebate has been taken into account in determining the amount payable to the vendor under the agreement, a statement that identifies each such rebate and the amount of the rebate;
• a statement as to whether the builder is a foreign supplier. ^{Footnote 3}

Depending on whether the builder is a foreign supplier, one of the following "Notice to Purchaser" notifications must also be included.

If the builder is NOT a foreign supplier, the following statement must be included in the written agreement:

If the builder is a foreign supplier^{Footnote 4}, the following statement must be included in the written agreement:

In addition, if the B.C. transition tax is payable on the sale of new housing or an interest therein, see under situation C below for additional information requirements that must be met at the time tax becomes payable.

B. Written agreement of purchase and sale entered into on or after February 17, 2012 and before December 1, 2012

In these cases, unless ownership or possession of the new housing or interest in the new housing transfers on or before December 31, 2012, the vendor must provide the purchaser with a written addendum to the agreement.^{Footnote 5} The addendum provides additional information, but does not amend the agreement. The addendum must be provided on or before January 2, 2013 and must contain the following items:

• each item set out under situation A above, including the applicable "Notice to Purchaser"; and
• the addendum must be signed by the vendor. It does not need to be signed by the purchaser.

The vendor must provide the written addendum to the purchaser in at least one of the following ways:

• by giving a copy of the written addendum in person to the purchaser or an agent of the purchaser;
• by sending a copy of the written addendum by courier or registered mail to the purchaser's address of record for delivery specified in the agreement;
• by sending a copy of the addendum to the purchaser's facsimile number of record specified in the agreement, provided that the facsimile confirmation of receipt is obtained; or
• by sending a copy of the addendum by any other method including, for example, electronic mail, provided the vendor obtains a written confirmation of receipt from the purchaser or purchaser's agent.

The addendum will be considered to have been provided to the purchaser:

• if provided by giving a copy in person, on the date the copy is given;
• if provided by sending a copy by courier or registered mail, on the date the copy is sent;
• if provided by facsimile, the date indicated on the confirmation of receipt; and
• if provided by sending a copy in any other manner, on the date indicated on the confirmation of receipt.

As stated above, if it is required, the addendum must be provided on or before January 2, 2013.

In addition, if the B.C. transition tax is payable on the sale of new housing or an interest therein, see under situation C below for additional information requirements that must be met.

C. Sales of new housing in respect of which the B.C. transition tax becomes payable on or after April 1, 2013 and before April 1, 2015

See the section entitled "B.C. transition tax" in GST/HST Notice 276, Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing for circumstances in which the B.C. transition tax applies. The B.C. transition tax will also be the subject of an info sheet to be published in the near future.

Regardless of the date on which the written agreement of purchase and sale is entered into, if the B.C. transition tax is payable on the sale of new housing or an interest therein, other specific information must be provided to the purchaser in the statement of adjustments or other similar document.

In such cases the vendor is required to include in the statement of adjustments or other document provided to the purchaser, by the time tax on the sale becomes payable, each of the following items:

• the value of consideration for the housing or an interest therein as established for GST/HST purposes;

• a statement as to whether the GST is payable on the sale and the amount of the tax;
• a statement as to whether the B.C. transition tax is payable on the sale and the amount of the tax;
• the completion percentage of the housing:
  • immediately before July 1, 2010,
  • immediately before April 1, 2013, and
  • at the time the GST is payable in respect of the sale;
• the amount of the B.C. transition rebate that the builder is entitled to claim;
• the amount of the B.C. PST transitional new housing rebate that the builder has claimed or is entitled to claim in respect of the housing;
• the amount of any GST/HST new housing rebate that the vendor agreed to pay or credit to the purchaser; and
• a statement as to whether the builder is a foreign supplier.

In the case of a grandparented sale, the statement of adjustments or other document must include the following statement:

In the case of a sale by a foreign supplier (other than a foreign supplier of a grandparented sale), the statement of adjustments or other document must include the following statement:

Penalties

If a vendor fails to fully and accurately disclose the required information as set out above, a penalty of up to 1% of the purchase price of the housing, to a maximum of $10,000 per sale, will be imposed on the vendor.

If a vendor knowingly, or under circumstances amounting to gross negligence, makes or participates in making a false statement or fails to fully and accurately disclose the required information, a penalty of up to 4% of the purchase price, to a maximum of $40,000 per sale, will be imposed on the vendor.

These penalties could be reduced or waived in certain circumstances.

Joint and several liability

If a vendor has, under an agreement of purchase and sale for new housing or an interest in such housing, agreed on behalf of another person to sell such housing or such an interest, the vendor and the other person are jointly and severally liable for all obligations and liabilities of the vendor that arise as a consequence of any failure to comply with the information requirements set out in the Regulation.

All technical publications related to the New Housing Transition Tax and Rebate Act are available on the CRA Web site at www.cra.gc.ca/gsthsttech.

Footnotes

Footnote 1

If the vendor and purchaser sign the written agreement of purchase and sale on different dates, for purposes of applying the information requirements, the agreement is entered into on the date of the last signature of the party (i.e., the vendor or the purchaser) to the written agreement.

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Footnote 2

For a discussion on when tax becomes payable, see the answer to question 6 in GST/HST Notice 276, Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing.

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Footnote 3

In this info sheet, a foreign supplier refers to a non-resident who makes a taxable supply of real property in Canada by way of sale and is not required to collect the tax. On sales of this nature, the purchaser is required to remit GST/HST directly to the government. If a non-resident is regarded as a resident only by virtue of having a permanent establishment in Canada, the non-resident is still regarded as a non-resident for purposes of whether they are relieved from having to collect the tax.

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Footnote 4

Where the builder is a foreign supplier, the purchaser must remit the B.C. transition tax directly to the CRA.

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Footnote 5

If ownership or possession of the new housing, or interest in it, transfers on or before December 31, 2012, the addendum need not be provided. However, if ownership or possession transfers after that date, the addendum must be provided even if the B.C. transition tax is not payable (e.g., if the transfer occurs in February 2013, the addendum must be provided even though the B.C. transition tax does not apply).

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Footnote 6

For a discussion of grandparented housing under the rules for the transition to the HST in 2010, see GST/HST Info Sheet GI-084, Harmonized Sales Tax: Information for Builders of New Housing in British Columbia.

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Date modified:

2012-12-14