Special Update for Ontario & BC

New HST for Ontario & BC Home Buyers

Effective July 1, 2010

 

 

 

What is the Harmonized Sales Tax (HST)?

Starting July 1, 2010, subject to legislative approval, the provincial sales taxes in Ontario and British Columbia would be replaced by a value-added tax structure and combined with the federal Goods and Services Tax (GST) to create a single, federally administered Harmonized Sales Tax (HST). The HST would be applied on most supplies of property and services made in those provinces at a blended rate of 13% in Ontario and 12% in British Columbia. With some exceptions, the HST would apply to the same base of property and services as the GST.

 

What property and services are exempt from the HST?

Examples of exempt property and services (related to real estate) include:

  • Used residential housing
  • Long term, residential accommodation (of one month or more), and residential condominium fees

 

How does the HST apply to new home purchases transactions that straddle the implementation date?

Generally, the HST would be charged on a purchase where payment is made or becomes due after April 2010 but delivery of the goods or services is made on or after July 1, 2010.

Special transitional rules would apply for real property sales and other transactions that occur during a period that includes the implementation date of July 1, 2010.

 

Transition Rules regarding Real Estate

  • Where ownership or possession of the new home is transferred before July 1, 2010 under a written agreement, the provincial portion (8% in Ontario / 7% in BC) does not apply.
  • Homes which were sold on or before June 18, 2009 under written agreements of purchase and sale will be grandparented. Effectively, such grandparented homes will not be subject to the provincial portion of the single sales tax where both ownership and possession of the grandparented home is transferred after June 30, 2010.
  • Home purchasers of newly constructed or substantially renovated homes will be subject to the single sales tax where both ownership and possession of the home are transferred after June 30, 2010.
  • After June 30, 2010, a transitional rebate will be available for non-grandparented single homes purchased by individuals or for builders who first rent the home. Individuals purchasing these new homes will have the option of obtaining the RST transitional rebate through the builder or by filing an application directly with the CRA. Individuals filing their own rebate will have to obtain the new home’s percentage of completion certificate from the builder.

 

Will there be a provincial homebuyer rebate for new home buyers?

Ontario and BC will both provide rebates (administered federally) for new housing purchased as a primary residence. The housing rebates will ensure that new homes purchased as primary residences across all price ranges would qualify for a rebate of up to $24,000 in Ontario and $26,250 in BC, while continuing to ensure that, on average, new homes priced up to $400,000 in Ontario and $525,000 in BC would not be subject to additional tax compared to the retail sales tax (RST) currently embedded in the price of new homes.

 

 

 

For more information, visit these websites:         http://www.gov.bc.ca/hst/faq.html

                                                                        http://www.cra-arc.gc.ca/gncy/hrmnztn/on/menu-eng.html

                                                                        http://www.rev.gov.on.ca/en/notices/hst/02.html

                                                                        http://www.grantthornton.ca/resources/insights/articles