Timing rules for determining when the GST/HST becomes payable on the supply of real property

Depending on the circumstances, there are different rules for determining when the GST/HST is payable on the supply of taxable real property.

On this page:

• Sales
• Supplies by way of lease, licence or similar arrangement (leases)
• Deposits
• Construction contracts and progress payments
• Holdbacks

Sales

Generally, the GST/HST is payable on a taxable sale of real property on the earlier of:

• the day that ownership of the property is transferred to the purchaser; and
• the day that possession of the property is transferred to the purchaser under the agreement.

In the case of a residential condominium unit where possession is transferred to the purchaser before the complex is registered as a condominium, tax is payable on the sale on the earlier of:

• the day that ownership of the unit transfers to the purchaser; and
• sixty days after the complex is registered as a condominium.

Supplies by way of lease, licence or similar arrangement (leases)

Leases are treated as a series of separate supplies for each period (referred to as a "lease interval") that the lease payment is made for. Each lease interval is treated as a separate supply.

If the lease is taxable, the GST/HST is payable on the earliest of:

• the first day of the lease interval;
• the day the payment for that interval becomes due; and
• the day the payment attributable to the lease interval is paid.

Deposits

A deposit is not treated as payment for a supply until the supplier applies the deposit, usually at the time the balance of the purchase price becomes due. GST/HST is payable on the deposit when the balance is paid.

For example, you made a $10,000 deposit on March 23, 2014 towards the purchase of taxable property in Manitoba valued at $50,000. On August 1, 2014, you took ownership of the property and the remaining $40,000 became due. GST was not payable when you made the deposit on March 23, 2014. However, GST was required to be calculated on the full purchase price [$50,000 × 5% = $2,500] when the balance became due on August 1, 2014.   

Construction contracts and progress payments

Usually, construction contracts call for progress payments to be made as work on a project proceeds. These payments may be due:

• on specific dates;
• as specified percentages of the work have been completed;
• when specific portions of the contract have been completed (for example, the pouring of the foundation); or
• upon specific events (for example, a preliminary inspection of the building).

The GST/HST is payable on each progress payment on the earlier of:

• the day the payment is made; and
• the day that payment becomes due according to the terms of the contract.

The amount of GST/HST payable is based on the amount called for in the contract for the progress payment, even if no payment or a partial payment is made.

Where, under the contract, another person, such as an engineer or architect, certifies the work and materials and approves an amount for payment, the request or application for payment by the contractor is not considered to be an invoice. In this case, the GST/HST is payable on the earlier of:

• the day the approved amount is paid;
• the day the approved amount is due according to the contract; or
• the date of the invoice.

Holdbacks

A holdback is usually a percentage of the payment that is held back by the recipient until the performance of the supply (or of a part) has been fully satisfied by the supplier.

The GST/HST is payable on the amount held back on the earlier of:

• the day the holdback is paid out; and
• the day the holdback period expires in accordance with either federal or provincial laws or under the terms of the agreement.

Forms and publications

• GST/HST Memorandum 19-1, Real Property and the GST/HST

Date modified:

2014-11-07