GST/HST Notice. No. 272 March 2012

Transcription

1 GST/HST Notice No. 272 March 2012 Harmonized Sales Tax Proposed Enhancements to the British Columbia New Housing Rebates and New Residential Rental Property Rebates On February 17, 2012, the Government of British Columbia announced its plans to implement enhancements to the existing British Columbia (B.C.) new housing rebates and new residential rental property rebates. The enhanced rebates, which would be administered by the Canada Revenue Agency (CRA), would generally come into effect for new housing on which the HST becomes payable on or after April 1, 2012 and before April 1, Note that the provincial grant for new secondary and recreational homes in areas outside the Capital and Greater Vancouver Regional Districts will not be administered by the CRA. Questions on that provincial grant should be directed to the B.C. Ministry of Finance toll free at or they can be ed to Questions on the B.C. first-time new home buyers bonus should be directed to the B.C. Ministry of Finance toll free at or they can be ed to This publication provides questions and answers that reflect the proposed tax changes concerning the B.C. housing rebates as announced in the Ministry of Finance Tax Information Notice, HST Notice #12, Enhanced New Housing Rebates and Transitional Rules for the Re-Implementation of the British Columbia Provincial Sales Tax, issued by the Government of British Columbia on February 17, Any commentary in this publication should not be taken as a statement by the CRA that these proposed changes will be enacted in their current form. Definitions and concepts in the Excise Tax Act would apply to the enhanced B.C. housing rebates described in this document. Table of Contents General...2 British Columbia new housing rebates...3 Purchase of a new house...3 Purchase of a new house together with leased land...5 Purchase of shares in a co-operative housing corporation...6 Mobile home or floating home...7 Owner-built home...8 Claiming the enhanced B.C. new housing rebate...10 British Columbia new residential rental property rebates...12 Lease of house and land...12 Sale of building and lease of land...14 Lease of land...15 Claiming the enhanced B.C. new residential rental property rebate...16 La version française de la présente publication est intitulée Taxe de vente harmonisée améliorations proposées aux remboursements pour habitations neuves et aux remboursements pour immeubles d habitation locatifs neufs de la Colombie-Britannique.

2 General 1. What is meant by new housing? For purposes of this document, new house, new home and new housing refer to a residential complex that is newly constructed or substantially renovated and include the building and land portions of the housing unless otherwise indicated. Housing that has been substantially renovated is generally given the same treatment under the GST/HST as newly constructed housing. Extensive modifications must have been made to the housing in order to meet the definition of a substantial renovation for GST/HST purposes. For a full explanation of the factors to consider in deciding 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. 2. What qualifies as a single-unit house? For purposes of this document, a single-unit house refers to a residential complex, which consists of a detached house, semi-detached house or an attached house, which may also contain an accessory suite (such as an in-law suite). 3. What qualifies as a duplex? For purposes of this document, a duplex refers to a residential complex containing not more than two residential units situated on a single parcel of real property. 4. What are the rebates for the provincial part of the HST currently available for new housing in B.C.? There are two main categories of B.C. housing rebates that may currently be available for newly constructed or substantially renovated housing: the B.C. new housing rebate and the B.C. new residential rental property rebate. 5. Who, and what types of housing, qualify for the existing B.C. new housing rebate? For details on the existing B.C. new housing rebate, refer to Guide RC4028, GST/HST New Housing Rebate. 6. Who, and what types of rental properties, qualify for the existing B.C. new residential rental property rebate? For details on the existing B.C. new residential rental property rebate, refer to Guide RC4231, GST/HST New Residential Rental Property Rebate. 7. How would the existing B.C. housing rebates be enhanced? B.C. intends to increase the maximum amount that may be claimed as a B.C. new housing rebate or a B.C. new residential rental property rebate. The enhanced rebates would be available for the provincial part of the HST paid for all types of housing that currently qualify for the existing B.C. housing rebates, and would be subject to the same eligibility conditions as the existing B.C. housing rebates. With the exception of owner-built homes and co-op housing, the enhanced rebate would be available where the HST becomes payable or, in the case of a self-supply, the HST is considered to be paid, on the new housing on or after April 1, 2012 and before April 1, The specific timing rules for each type of rebate are explained in the sections that follow. 2

3 8. Who would administer the enhancements to the B.C. housing rebates? The enhanced B.C. housing rebates would be administered by the CRA. The provincial grant for new secondary and recreational homes in areas outside the Capital and Greater Vancouver Regional Districts will be administered by the Government of British Columbia. For information on the provincial grant, contact the B.C. Ministry of Finance toll-free at or your questions to For information on the B.C. first-time new home buyers bonus, contact the B.C. Ministry of Finance toll free at or your questions to British Columbia new housing rebates Purchase of a new house 9. How is the existing B.C. new housing rebate calculated, and how would the enhanced B.C. new housing rebate be calculated, for the purchase of new housing? The existing B.C. new housing rebate is equal to 71.43% of the 7% provincial part of the HST that an individual who qualifies for the rebate paid on the purchase price of the new housing and, if applicable, on the purchase of an interest in the new housing (e.g., where a previous purchaser assigns the purchase and sale agreement to the individual on a taxable basis), subject to a maximum rebate amount. In the case of the purchase of a new house, the current maximum rebate is $26,250, which equates to a purchase price (i.e., before HST and rebates) of $525,000. The enhanced B.C. new housing rebate, in the case of the purchase of a single-unit house, duplex or residential condominium unit, would remain equal to 71.43% of the 7% provincial part of the HST that an individual who qualifies for the rebate pays on the purchase price of the new housing and, if applicable, on the purchase of an interest in the new housing. However, the maximum rebate that may be claimed would be increased to $42,500. As a result, a qualifying purchaser of a new or substantially renovated single-unit house, duplex or residential condominium unit with a purchase price of up to $850,000 (before HST and rebates) would be eligible for a rebate of 71.43% of the provincial part of the HST paid, to a maximum rebate of $42,500. Where the purchase price is more than $850,000, a purchaser who qualifies for the rebate would be eligible for the maximum rebate of $42, When would the enhanced B.C. new housing rebate be available for the purchase of new housing? The enhanced B.C. new housing rebate would be available to an individual for the purchase from a builder of a new or substantially renovated single-unit house, duplex or residential condominium unit where the HST on the purchase becomes payable on or after April 1, 2012 and before April 1, 2013 and the individual qualifies for the existing B.C. new housing rebate. 11. When does the HST become payable on the purchase of new housing from a builder? GST/HST generally becomes payable on the purchase of new housing 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 for the supply. 3

4 However, there is a special timing rule that applies to the purchase of a residential condominium unit if possession of the unit is transferred to the purchaser before the condominium complex in which the unit is situated is registered as a condominium. In that case, the GST/HST becomes payable on the earlier of: the day ownership of the unit is transferred to the purchaser; and the day that is 60 days after the condominium complex is registered as a condominium. 12. I buy a new house from a builder and both ownership and possession transfer to me under the written agreement of purchase and sale on May 31, The purchase price of the home is $875,000 plus the HST. Would I be eligible for the enhanced B.C. new housing rebate? As the HST on your purchase will be payable on or after April 1, 2012 and before April 1, 2013, you would be eligible for the maximum enhanced B.C. new housing rebate of $42,500, provided you meet the conditions for the existing B.C. new housing rebate. 13. On November 15, 2011, I entered into a written agreement of purchase and sale to buy a new duplex for $950,000 plus HST. Under the agreement, possession of the duplex will transfer to me on March 24, 2012, but title won t transfer until April 1, Would I be eligible for the enhanced B.C. new housing rebate? The HST on your purchase becomes payable on March 24, 2012, which is the earlier of the day that ownership or possession of the duplex is transferred under the agreement. As the HST becomes payable prior to April 1, 2012, the enhanced B.C. new housing rebate would not be available on this purchase. Provided you satisfy all of the conditions for the existing B.C. new housing rebate, you would be eligible to recover 71.43% of the 7% provincial part of the HST that you paid on the purchase price of the duplex, to a maximum of $26, On January 2, 2012, I entered into a written agreement to purchase a new house from a builder for $440,000 plus the HST. Title and possession of the house will transfer to me on April 30, I am eligible for both the federal GST/HST new housing rebate and the existing B.C. new housing rebate, and the builder has agreed to pay or credit those amounts to me. The value of my B.C. new housing rebate under the existing rules is $22,000 (71.43% $28,000, being the provincial part of the HST paid). Would I be able to claim the enhanced B.C. new housing rebate? The proposed changes provide for an increase in the maximum rebate currently available under the existing B.C. new housing rebate, and would only affect newly constructed or substantially renovated homes for which the consideration is over $525,000. The enhanced B.C. new housing rebate would remain equal to 71.43% of the 7% provincial part of the HST that you, as a qualifying individual, paid on the purchase price of the new housing. As such, the amount of the B.C. new housing rebate to which you are entitled would remain unchanged (i.e., $22,000). 15. On February 14, 2012, I entered into a written agreement to purchase a new single-unit house from a builder for $800,000 plus the HST. Ownership and possession transfer to me under the agreement, and the HST becomes payable, on July 31, At the time we entered into the agreement, I qualified for the maximum existing B.C. new housing rebate of $26,250 and the builder agreed to pay or credit the rebate amount to me. Would I now be eligible for the enhanced B.C. new housing rebate? If so, what would be the total enhanced rebate? As the HST on your purchase will be payable on or after April 1, 2012 and before April 1, 2013, your B.C. new housing rebate would be subject to the proposed enhanced rebate threshold of $42,500. The total of your enhanced B.C. new housing rebate would be $40,001 ($800,000 7% 71.43%). Please see the section entitled Claiming the enhanced B.C. new housing rebate in this notice for an explanation as to how this amount may be claimed. 4

5 16. On December 1, 2012, I enter into a written agreement to purchase a new single-unit house from a builder and both ownership and possession are to transfer to me under the agreement on March 31, However, due to unforeseen construction delays, ownership and possession transfer to me on June 30, The agreement indicates that the purchase price of the home is $800,000 plus the HST. Would I be eligible for the enhanced B.C. new housing rebate? If ownership and possession do not transfer to you until June 30, 2013, the HST would no longer be payable on your purchase of the house (the GST and the B.C. transition tax would apply). As such, you would not be eligible for either the existing or the enhanced B.C. new housing rebate. For further information on the B.C. transition tax, see the B.C. Ministry of Finance Tax Information Notice, HST Notice #12, Enhanced New Housing Rebates and Transitional Rules for the Re-Implementation of the British Columbia Provincial Sales Tax. Purchase of a new house together with leased land 17. How is the existing B.C. new housing rebate calculated, and how would the enhanced B.C. new housing rebate be calculated, for the purchase of new housing together with a lease of the related land under the same agreement? The existing B.C. new housing rebate is equal to 4.47% of the price attributable to the building portion, to a maximum rebate amount of $26,250. The enhanced B.C. new housing rebate available to a purchaser who is eligible for the rebate would continue to be calculated at 4.47% of the price attributable to the building portion. However, the maximum rebate that may be claimed would be increased to $42,500. There would be no phase-out of this rebate, such that a house priced above $952,000 (i.e., $850,000 plus 12% embedded HST) would qualify for the maximum rebate amount of $42, When would the enhanced B.C. new housing rebate be available for the purchase of new housing together with a lease of the related land under the same agreement? An enhanced B.C. new housing rebate would be available for the purchase of a newly constructed or substantially renovated single-unit house or duplex where the individual qualifies for the existing B.C. new housing rebate and the builder is considered to have made a self-supply on or after April 1, 2012 and before April 1, What is a self-supply and when is it triggered? A self-supply is a situation where a builder of new housing is considered to make a sale and repurchase of the housing and to have both collected and paid the HST at the time of the self-supply. A self-supply by a builder is triggered at the later of the time construction or substantial renovation of the housing is substantially completed and the time possession or use of the housing, or a unit in the housing, is given under a lease, licence or similar arrangement for use by an individual who is the first to occupy the housing as a place of residence. For a complete discussion on self-supplies of new housing, see the section entitled When you finish construction in Guide RC4052, GST/HST Information for the Home Construction Industry. 5

6 20. On January 5, 2012, an individual entered into a written agreement with a builder for the purchase and sale of a newly constructed detached house together with a lease of land under the same agreement. Substantial completion of the construction of the house occurs in January Possession and ownership of the building portion of the house, and possession of the land portion of the house, are transferred to the individual on March 1, Would the enhanced B.C. new housing rebate be available to the individual? The builder is considered to have made a self-supply of the property (building and land) on March 1, 2013 and is required to account for the HST on the fair market value of the property on the builder s GST/HST return for the applicable reporting period. As the HST is considered to be paid by the builder on or after April 1, 2012 and before April 1, 2013, if the individual satisfies the eligibility conditions for the existing B.C. new housing rebate, the individual would be entitled to receive an enhanced rebate of 4.47% of the consideration attributable to the building portion (excluding any amounts paid as rent) to a maximum rebate of $42,500. Purchase of shares in a co-operative housing corporation 21. How is the existing B.C. new housing rebate calculated, and how would the enhanced B.C. new housing rebate be calculated, for the purchase of a qualifying share in a co-operative housing corporation (housing co-op)? The existing B.C. new housing rebate is equal to 4.47% of the purchase price of the qualifying share, subject to a maximum rebate amount of $26,250. The enhanced B.C. new housing rebate would continue to be calculated as 4.47% of the purchase price of the qualifying share. However, the maximum available rebate would be increased to $42,500. There would be no phase-out of this rebate. Therefore, shares priced above $952,000 (i.e., $850,000 plus the 12% embedded HST) would qualify for the maximum rebate of $42, When would the enhanced B.C. new housing rebate be available for the purchase of a qualifying share in a housing co-op? The enhanced B.C. new housing rebate would be provided to an individual for the purchase of a qualifying share in a housing co-op where: the co-op purchased the new housing complex and the HST became payable on the purchase on or after April 1, 2012 and before April 1, 2013; or the co-op, as a builder of the new housing complex, is required to self-supply on the complex on or after April 1, 2012 and before April 1, 2013; and the individual qualifies for the existing B.C. new housing rebate. A claim for a B.C. new housing rebate for the purchase of a qualifying share in a housing co-op may be subject to a special filing deadline. See the section entitled Claiming the enhanced B.C. new housing rebate in this notice for more details. 23. When is a self-supply by the co-op, as a builder of a multiple unit housing complex, triggered? The self-supply by the co-op occurs at the later of the time construction or substantial renovation of the housing complex is substantially completed and the time possession or use of a unit in the housing complex is given under a lease, licence, or similar arrangement for use by an individual who is the first to occupy a unit in the housing complex as a place of residence. For a complete discussion on self-supplies of new housing, see the section entitled When you finish construction in Guide RC4052, GST/HST Information for the Home Construction Industry. 6

7 24. I bought a qualifying share in a housing co-op to acquire a unit in its new multi-unit housing complex (not a condominium complex) for use as my primary place of residence. I do not get possession of my unit until April 15, 2012, and will be the first person to occupy the unit. The housing co-op built the housing complex and other units in the complex were first occupied as a place of residence by purchasers of a share as early as March 1, The purchase price of my share was $700,000. I am eligible for the existing B.C. new housing rebate. Would I also be eligible for the enhanced B.C. new housing rebate? The self-supply by the co-op occurs at the later of the time construction of the housing complex is substantially completed and the time possession or use of a unit in the housing complex is given under a lease, licence, or similar arrangement for use by an individual who is the first to occupy a unit in the housing complex as a place of residence. Provided the construction of the complex was substantially completed by March 1, 2012 the co-op s self-supply of the housing complex would be on March 1, 2012, and the co-op would be considered to have paid HST on the self-supply at that time. If so, the enhanced B.C. new housing rebate would not be available to you because the HST on the co-op s self-supply was considered to have been paid prior to April 1, Mobile home or floating home 25. (a) How is the existing B.C. new housing rebate calculated for the purchase of a new mobile home or floating home? For details on claiming the existing B.C. new housing rebate for the purchase of a new mobile home or floating home, refer to GST/HST Info Sheet GI-081, Harmonized Sales Tax: Information on Owner-built Homes, Mobile Homes and Floating Homes in British Columbia, and to Guide RC4028, GST/HST New Housing Rebate, for details about the eligibility rules, qualifying expenses, and restrictions for each. For purposes of the GST/HST, a mobile home includes certain modular homes. Modular homes are considered mobile homes for GST/HST purposes provided they meet certain criteria including that the manufacture or assembly of the modular home is substantially completed prior to being moved to a site. For more detailed information, refer to GST/HST Policy Statement P-223, Meaning of manufacture or assembly of which is completed or substantially completed in the definition of mobile home. (b) How would the enhanced B.C. new housing rebate be calculated for the purchase of a newly constructed or substantially renovated mobile home or floating home? Where the mobile home and the land on which the mobile home is placed are purchased together from the builder of the mobile home, the enhanced B.C. new housing rebate would be calculated using the same method as before (71.43% of the 7% provincial part of the HST that a qualifying individual paid on the purchase price of the new mobile home and the land or on the floating home). However, the maximum rebate that may be claimed would be increased from $26,250 to $42,500. Where the mobile home is purchased from a builder together with leased land (other than a site in a residential trailer park) the enhanced B.C. new housing rebate would be 4.47% of the price attributable to the mobile home, as described previously in the section entitled Purchase of a new house together with leased land. However, the maximum rebate would be increased from $26,250 to $42,500. Where a mobile home is purchased and affixed to a site in a residential trailer park, or a floating home is purchased and docked at a moorage facility, the enhanced B.C. new housing rebate only applies to the provincial part of the HST paid on the purchase of the mobile home or floating home, not the HST paid, if 7

8 any, on the site or moorage. The enhanced B.C. new housing rebate in this case would be 71.43% of the provincial part of the HST paid for the qualifying mobile or floating home, to a maximum rebate of $42,500. Where the mobile home is purchased from a builder and placed on land purchased from a separate supplier, the individual purchaser would be allowed to choose to claim the enhanced B.C. new housing rebate by means of: Option 1 a rebate for an owner-built home, or Option 2 a rebate for a home purchased from a builder. Mobile and floating homes priced above $850,000 may qualify for the maximum rebate of $42, When would the enhanced B.C. new housing rebate be provided for the purchase of a new mobile or floating home? The enhanced B.C. new housing rebate would generally be provided to an individual for their purchase of a new or substantially renovated mobile or floating home from a builder, where the HST becomes payable on or after April 1, 2012 and before April 1, 2013, and the individual qualifies for the existing B.C. new housing rebate. However, if the individual opts to claim a B.C. new housing rebate for an owner-built home, that individual s claim for the enhanced B.C. new housing rebate would be subject to the requirements explained in the next section entitled Owner-built home. The rebate claim may also be subject to a special filing deadline. See the section entitled Claiming the enhanced B.C. new housing rebate in this notice for details. The enhanced B.C. new housing rebate would also be provided to an individual for their purchase of a new or substantially renovated mobile home from a builder on leased land (other than a site in a residential trailer park) where the self-supply occurs on or after April 1, 2012 and before April 1, 2013 and the individual qualifies for the existing B.C. new housing rebate. Owner-built home 27. How is the existing B.C. new housing rebate calculated, and how would the enhanced B.C. new housing rebate be calculated, for an owner-built home? The existing B.C. new housing rebate is 71.43% of the provincial part of the HST paid on qualifying construction expenses, subject to a maximum rebate amount. The maximum B.C. new housing rebate for owner-built homes depends on whether the individual paid the provincial part of the HST on their purchase of the land. The existing maximum B.C. new housing rebate for an owner-built home is: $17,588, if the individual did not pay the HST on the purchase of the land (e.g., the HST would not have applied if ownership or possession of the land was transferred to the individual before July 2010 or if the purchase was exempt from the HST) or if the individual leases the land; or $26,250, if the individual paid the HST on the purchase of the land (e.g., the individual purchases land on which tax is payable and ownership and possession of the land are transferred to the individual after June 2010). This claim may be subject to the special filing deadline, explained in the section entitled Claiming the enhanced B.C. new housing rebate in this notice. 8

9 The enhanced B.C. new housing rebate would continue to be calculated as 71.43% of the provincial part of the HST paid on qualifying construction expenses, but the maximum rebate would be increased. The maximum enhanced B.C. new housing rebate for owner-built homes would depend on whether the individual paid the provincial part of the HST on the land. As proposed, the maximum enhanced B.C. new housing rebate for an owner-built home would be increased to: $28,475, if the individual did not pay the HST on the purchase of the land (e.g., the HST would not have applied if ownership or possession of the land was transferred to the individual before July 2010 or if the purchase was exempt of the HST) or if the individual leases the land; or $42,500, if the individual paid the HST on the purchase of the land (e.g., the individual purchases land on which tax is payable and ownership and possession of the land are transferred to the individual after June 2010). As there would be no phase-out of this rebate, owner-built homes with qualifying construction expenses over $850,000 would qualify for the maximum rebate of $42, When would the enhanced B.C. new housing rebate be provided for an owner-built home? The enhanced B.C. new housing rebate would be available to an individual for an owner-built home where the individual qualifies for the existing B.C. new housing rebate of the HST paid on qualifying construction expenses, and if: the construction or substantial renovation becomes substantially completed on or after April 1, 2012 (for further information on determining when a house becomes substantially completed, see the section entitled Definitions in Guide RC4028, GST/HST New Housing Rebate); and the rebate application is filed with the CRA on or after April 1, 2012 and within the permitted time limits. The time limits for claiming the new housing rebate in respect of owner-built homes are set out in the section entitled Filing deadlines in Guide RC4028, GST/HST New Housing Rebate. However, see the section entitled Claiming the enhanced B.C. new housing rebate in this notice for the special filing deadline for owner-built homes. 29. I am constructing a house for my family on land that I purchased in December I paid GST (the provincial part of the HST did not apply at that time) on the purchase of the land. I have paid HST on all of the construction materials used to date to construct the house. The construction of the house will be substantially completed in September Would I be able to claim the enhanced B.C. new housing rebate at that time? Given that the construction of your home would become substantially completed, and that your application for the rebate would be filed, on or after April 1, 2012, you would be entitled to claim an enhanced B.C. new housing rebate for owner-built homes, provided that you meet the conditions that are in place for claiming the existing B.C. new housing rebate. If so, your B.C. new housing rebate would be equal to 71.43% of the provincial part of the HST that you paid on your eligible construction costs, subject to the applicable rebate maximum. Given that you did not pay the provincial part of the HST on your purchase of the land (as the transaction was subject to the GST alone), the maximum rebate that you could claim would be $28,475. 9

10 30. I hired a contractor to build a new home on land that I own. Construction was substantially completed in February 2012 and I moved into the home on March 1, I paid the HST on my purchase of the land and on all of the construction costs. I am eligible for the existing B.C. new housing rebate on my eligible expenses, but the maximum rebate I can claim for that is $26,250. If I wait to file my application until after March 2012, would I be eligible to calculate my rebate based on the maximum rebate amount for the enhanced B.C. new housing rebate? No, you would not be eligible to claim the enhanced B.C. new housing rebate because the construction of your home was substantially completed before April 1, Your B.C. new housing rebate would remain limited to $26,250, even where you file your rebate application on or after April 1, The rebate must be filed within the permitted time limits (see Guide RC4028, GST/HST New Housing Rebate); however, see the section entitled Claiming the enhanced B.C. new housing rebate in this notice for the special filing deadline for owner-built homes. Claiming the enhanced B.C. new housing rebate 31. I am constructing a house for my family and paid HST on both the purchase of the land and all of the construction costs. The house will become substantially completed in October I am eligible for the existing B.C. new housing rebate. How would I claim the enhanced B.C. new housing rebate? The enhanced B.C. new housing rebate will be administered by the CRA. Revised rebate application forms will be available on the CRA Web site in April 2012 and Guide RC4028, GST/HST New Housing Rebate will be updated to include instructions for completing and filing your application. 32. I am a developer who entered into a written agreement on February 14, 2012 to sell a new residential condominium unit to an individual for $990,000 plus $118,800 HST. Title and possession will transfer to the individual on August 19, The purchaser qualifies for the existing B.C. new housing rebate (the $26,250 maximum), and I have agreed to pay or credit that amount to the purchaser. Under the enhanced rebate rules, the purchaser would be eligible for the new maximum rebate of $42,500. Am I required to pay or credit the additional $16,250 ($42,500 $26,250) to the purchaser at the time of the sale? Would I be able to claim a deduction for this amount when I calculate my net tax? When a qualifying home is sold by a builder, the builder would have the option of paying or crediting the enhanced B.C. new housing rebate to the purchaser at the time of purchase, as the builder does now with the existing B.C. new housing rebate. Where you have agreed to pay or credit the existing B.C. new housing rebate to the purchaser at the time of purchase, you would also be able to pay or credit to the purchaser the additional rebate amount that would be available as a result of the enhancements to the rebate. If you pay or credit the additional rebate amount, the purchaser would receive the benefit of this amount at the time of purchase. If you pay or credit the additional rebate amount (in this case, $16,250) to the purchaser, you would be eligible to claim a deduction from your net tax for the total amount of the enhanced rebate paid or credited to the purchaser (in this case, $42,500). However, you would not be entitled to claim a deduction from net tax for the additional rebate amount if you agree to pay or credit only the existing rebate amount to the purchaser. In that event you would be eligible to claim a deduction from net tax for the existing rebate only (in this case, $26,250). The purchaser would be able to receive the enhanced portion of the rebate by contacting the CRA directly. Further details on how to contact the CRA will be made available in the near future. 10

11 33. On November 1, 2011, I entered into a written agreement to purchase a new house from a builder for $870,000 plus the HST. Title and possession of the house will transfer to me under the agreement on June 1, I qualify for the maximum rebate under the existing B.C. new housing rebate provisions, and the builder has agreed to pay or credit that amount to me. How would I claim the enhanced B.C. new housing rebate? The builder would be able to pay or credit the additional rebate amount to you so that you receive the total amount of the enhanced rebate at the time of purchase. If the builder does not agree to pay or credit the additional rebate amount to you, you could still receive the enhanced portion of the rebate by contacting the CRA directly. Further details on how to contact the CRA will be made available in the near future. Whether the rebate application is submitted by the builder or the purchaser, in all cases only one rebate application can be filed with the CRA in respect of a single housing purchase. 34. On April 2, 2012, I enter into a written agreement to purchase a new house from a builder for $700,000 plus the HST. Title and possession of the house will transfer to me under the agreement on June 1, I qualify for both the $26,250 existing B.C. new housing rebate and the additional amount of $8,751 that would be available as a result of the enhancements to the rebate. However, the builder has not agreed to pay or credit either amount to me. How would I claim the rebate? If the builder does not agree to pay or credit the enhanced B.C. new housing rebate, you would be able to file an application for the rebate directly with the CRA for the total amount of the enhanced rebate. Your rebate application must be filed by the deadline for claiming the rebate, i.e., within two years after June 1, 2012, the date ownership of the house is transferred to you. 35. Are the filing deadlines for the enhanced B.C. new housing rebates the same as those for the existing B.C. new housing rebates? The time limits for claiming the existing B.C. new housing rebates would generally continue to apply for the enhanced new housing rebates. In most cases, new housing rebates must be claimed within two years of a specific event. For details on the specific event that triggers the start of the two year period, see Guide RC4028, GST/HST New Housing Rebate. However, for certain housing types (i.e., housing acquired through the purchase of qualifying shares in a housing co-op and owner-built housing), the existing or enhanced B.C. new housing rebate would be available only where the application is filed with the CRA before April 1, 2017, even if on that date the time limit that would otherwise apply to those rebates has not yet expired. 36. In November 2011, an individual purchases land and begins construction of his new home. He pays HST on the land purchase and on all construction costs that are invoiced before April 1, The individual s construction of the home will become substantially completed, and he will begin to occupy it as a place of residence, on September 1, Would he be eligible for the enhanced B.C. new housing rebate? If so, what would be the deadline for the individual to claim the rebate? If the individual satisfies the eligibility conditions for the existing B.C. new housing rebate, the individual would be entitled to claim an enhanced B.C. new housing rebate, up to a maximum amount of $42,500, for the provincial part of the HST paid on the purchase of the land and on eligible construction expenses. The individual would be entitled to the enhanced rebate if he files a rebate application with the CRA before April 1, 2017 (and following substantial completion of the home). [Ordinarily, the individual would have up to two years from September 1, 2016, to claim the rebate (i.e., until August 31, 2018). 11

12 However, in this case, the B.C. new housing rebate, including the enhanced amount, would be available only where the application is filed with the CRA before April 1, 2017.] 37. When would the CRA pay the enhanced B.C. new housing rebate? The CRA would only be able to pay the enhanced B.C. new housing rebate once the regulations permitting the enhanced rebate are published in the Canada Gazette. British Columbia new residential rental property rebates 1 Lease of house and land 38. (a) How is the existing B.C. new residential rental property rebate calculated where new housing is purchased, or built or substantially renovated, for rental purposes? The existing B.C. new residential rental property rebate is equal to 71.43% of the 7% provincial part of the HST that a landlord: paid on the purchase price of new housing and, if applicable, on the purchase of an interest in the new housing (e.g., where the previous purchaser assigns the purchase and sale agreement to the landlord on a taxable basis); or was deemed to have paid under the self-supply rules; and that is attributable to a qualifying residential unit, subject to a maximum rebate amount. The current maximum B.C. new residential rental property rebate for a qualifying residential unit is $26,250. For multiple-unit rental housing (i.e., generally housing with more than two residential units), the maximum rebate of $26,250 applies for each qualifying residential unit. (b) How would the enhanced B.C. new residential rental property rebate be calculated for new housing purchased, or built or substantially renovated, for rental purposes? With respect to a landlord s purchase of new housing, the enhanced B.C. new residential rental property rebate would remain equal to 71.43% of the 7% provincial part of the HST that a landlord paid on the purchase price of new housing and, if applicable, on the purchase of an interest in the new housing (e.g., where the previous purchaser assigns the purchase and sale agreement to the landlord on a taxable basis), and that is attributable to a qualifying residential unit, subject to a maximum rebate amount. With respect to a landlord s construction or substantial renovation of new housing, the enhanced B.C. new residential rental property rebate would remain equal to 71.43% of the 7% provincial part of the HST that a landlord pays on the self-supply of the housing where the self-supply occurs on or after April 1, 2012 and before April 1, 2013, and that is attributable to a qualifying residential unit, subject to a maximum rebate amount. The maximum B.C. new residential rental property rebate that may be claimed for a qualifying residential unit would be increased to $42,500. For multiple-unit rental housing (i.e., generally, housing with more than two residential units), the maximum rebate of $42,500 applies for each qualifying residential unit. 1 In the Ministry of Finance Tax Information Notice, HST Notice #12, Enhanced New Housing Rebates and Transitional Rules for the Re-Implementation of the British Columbia Provincial Sales Tax, issued by the Government of British Columbia on February 17, 2012, the new residential rental property rebate is referred to as the new rental housing rebate. 12

13 As a result, a purchaser of a residential complex with a purchase price attributable to each qualifying residential unit of up to $850,000 (before HST and rebates) would be eligible for a rebate of 71.43% of the provincial part of the HST paid, to a maximum rebate of $42,500 per qualifying residential unit. A builder of a residential complex with a fair market value attributable to each qualifying residential unit of up to $850,000 would be eligible for a rebate of 71.43% of the provincial part of the HST paid on the self-supply, to a maximum rebate of $42,500 per qualifying residential unit. Where the purchase price or fair market value attributable to the qualifying residential unit is more than $850,000, the landlord would be eligible for the maximum rebate of $42,500 per qualifying residential unit. 39. When would the enhanced B.C. new residential rental property rebate be provided to a landlord who purchases, or builds or substantially renovates, new housing for rental purposes? The enhanced B.C. new residential rental property rebate would be available to a landlord who purchases newly constructed or substantially renovated housing for rental purposes, or who constructs or substantially renovates housing for rental purposes, where the HST on the purchase or the self-supply, as the case may be, becomes payable on or after April 1, 2012 and before April 1, 2013, and the landlord qualifies for the existing B.C. new residential rental property rebate. 40. When does tax become payable on a landlord s purchase of new housing? GST/HST generally becomes payable on the purchase of new housing 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 for the supply. However, there is a special timing rule that applies to the purchase of a residential condominium unit if possession of the unit is transferred to the purchaser before the condominium complex in which the unit is situated is registered as a condominium. In this case, the GST/HST becomes payable on the earlier of: the day ownership is transferred to the purchaser; and the day that is 60 days after the condominium complex is registered as a condominium. 41. I bought a new house from a builder that I intend to rent to an individual as a primary place of residence. Both ownership and possession transfer to me under the written agreement on May 1, Would I be eligible for the enhanced B.C. new residential rental property rebate? As the HST on your purchase will be payable on May 1, 2012 (i.e., on or after April 1, 2012 and before April 1, 2013), you would be eligible for the enhanced B.C. new residential rental property rebate, provided you meet the conditions for claiming the existing B.C. new residential rental property rebate. Refer to Guide RC4231, GST/HST New Residential Rental Property Rebate for information on the conditions and deadlines for claiming the new residential rental property rebate. 42. On January 31, 2012, I entered into a written agreement of purchase and sale to buy a new condo unit that I intend to rent to an individual as a primary place of residence. Under the agreement, possession of the condo will be transferred to me on March 31, The condominium complex is to be registered as a condominium on April 15, 2012, and title to the unit will transfer to me on the same day. Would I be eligible for the enhanced B.C. new residential rental property rebate? As the condominium complex will not be registered as a condominium when possession of the unit is transferred to you, the HST will not become payable on your purchase at the time possession of the unit is transferred to you. Rather, the HST will become payable on April 15, 2012 (being the earlier of the day ownership is transferred to you and the day that is 60 days after the condominium complex is registered as a condominium). As the HST on your purchase will be payable on or after April 1, 2012 and before April 1, 2013, you would be eligible for the enhanced B.C. new residential rental property rebate, 13

14 provided you meet the conditions for claiming the existing B.C. new residential rental property rebate. Refer to Guide RC4231, GST/HST New Residential Rental Property Rebate for information on the conditions and deadlines for claiming the new residential rental property rebate. 43. When does tax become payable on a landlord s self-supply of new housing? If a landlord that constructs or purchases new housing meets the definition of a builder for GST/HST purposes, a self-supply by the landlord is triggered at the later of the time construction or substantial renovation of the housing is substantially completed and the time possession or use of the housing, or a unit in the housing, is given to an individual who is the first to occupy the housing as a place of residence. For a complete discussion on self-supplies of new housing, see the section entitled When you finish construction in Guide RC4052, GST/HST Information for the Home Construction Industry. The landlord is considered to have both collected and paid the HST on the housing at the time of the self-supply. 44. In October 2011, a corporation completed construction of a house that it originally intended to sell. However, a buyer could not be found, so the corporation has now entered into a one-year lease agreement with an individual who will occupy the house as her primary place of residence. She is the first person to occupy the house as a place of residence after the substantial completion of the construction of the house. The individual will get possession of the house under the agreement on March 1, The corporation is eligible for the existing B.C. new residential rental property rebate. Would the corporation also be eligible for the enhanced B.C. new residential rental property rebate? No, the corporation s self-supply of the house (building and land) would be triggered at the time possession or use of the house is given to the individual (i.e., March 1, 2012), and the corporation would be considered to have collected and paid HST on the self-supply at that time. Therefore, the enhanced B.C. new residential rental property rebate would not be available to the corporation even if it is eligible for the existing B.C. new residential rental property rebate, because the HST on the corporation s self-supply became payable prior to April 1, Sale of building and lease of land 45. (a) How is the existing B.C. new residential rental property rebate calculated where the builder makes an exempt sale of new housing together with an exempt long-term lease of the land under the same agreement? The existing B.C. new residential rental property rebate is equal to 71.43% of the 7% provincial part of the HST that a builder is deemed to have paid under the self-supply rules and that is attributable to a qualifying residential unit, minus the B.C. new housing rebate that the purchaser is entitled to claim. (Note: If the purchaser of the building part of the complex is not entitled to claim the B.C. new housing rebate, the builder is not entitled to claim the B.C. new residential rental property rebate.) The current maximum B.C. new residential rental property rebate for a qualifying residential unit is $26,250. For multiple-unit rental housing (i.e., generally, housing with more than two residential units) the maximum rebate of $26,250 applies for each qualifying residential unit. (b) How would the enhanced B.C. new residential rental property rebate be calculated where the builder makes an exempt sale of new housing together with an exempt long-term lease of the land? The enhanced B.C. new residential rental property rebate would remain equal to 71.43% of the 7% provincial part of the HST that a builder is deemed to have paid under the self-supply rules and that is 14

15 attributable to a qualifying residential unit, minus the enhanced B.C. new housing rebate that the purchaser is entitled to claim. (Note: If the purchaser of the building is not entitled to claim the enhanced B.C. new housing rebate, the builder is not entitled to claim the enhanced B.C. new residential rental property rebate.) However, the maximum B.C. new residential rental property rebate that may be claimed for a qualifying residential unit would be increased to $42,500. For multiple-unit rental housing (i.e., generally housing with more than two residential units), the maximum rebate of $42,500 would apply for each qualifying residential unit. 46. When would the enhanced B.C. new residential rental property rebate be provided to a builder who makes an exempt sale of new housing together with an exempt long-term lease of the land? The enhanced B.C. new residential rental property rebate would be available where the HST on the self-supply becomes payable on or after April 1, 2012 and before April 1, 2013 and the builder qualifies for the existing B.C. new residential rental property rebate. 47. When does tax become payable on a builder s self-supply? A self-supply by a builder is triggered at the later of the time construction or substantial renovation of the housing is substantially completed and the time possession or use of the housing, or a unit in the housing, is given to an individual who is the first to occupy the housing or unit as a place of residence. For a complete discussion on self-supplies of new housing, see the section entitled When you finish construction in Guide RC4052, GST/HST Information for the Home Construction Industry. Lease of land 48. (a) How is the existing B.C. new residential rental property rebate calculated where a person must pay HST on leased land under the self-supply rules? The existing B.C. new residential rental property rebate for such qualifying land rentals is 71.43% of the provincial part of the HST paid under the self-supply rules, to a maximum of $8,663 (i.e., 33% of $26,250). For qualifying multiple residential lots or sites in a residential trailer park or addition thereto, the maximum rebate amount of $8,663 applies to each lot or site. (b) How would the enhanced B.C. new residential rental property rebate be calculated in this case? The enhanced rebate for such qualifying land rentals would be equal to 71.43% of the provincial part of the HST paid under the self-supply rules, to a maximum of $14,025 (i.e., 33% of $42,500). For qualifying multiple residential lots or sites in a residential trailer park or addition thereto, the maximum rebate of $14,025 would apply to each lot or site. 49. When would the enhanced B.C. new residential rental property rebate be provided to a person who must pay HST on leased land under the self-supply rules? The enhanced B.C. new residential rental property rebate would be available where the HST is considered to be paid by the person on or after April 1, 2012 and before April 1, 2013 under the self-supply rules and the person qualifies for the existing B.C. new residential rental property rebate. 15