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GST Rebate and New Home Construction in B.C.

Posted on June 24, 2014

Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.

On May 31, 2012, the Province of British Columbia passed the following bills:
Bill 54 – 2012, the Provincial Sales Tax Act, to re-implement the provincial sales tax (PST) in British Columbia (B.C.) alongside the GST, effective April 1, 2013. As of that date, the 12% HST for B.C., composed of a 5% federal part and a 7% provincial part (the provincial part) no longer applies in B.C.; and
Bill 56 – 2012, the New Housing Transition Tax and Rebate Act, which sets out special transitional rules that apply to new housing transactions where at least 10% of the construction occurs before April 1, 2013, and ownership and possession of the housing transfer on or after that date.
British Columbia Basic Tax Content.

What happened to the 12% HST after March 31, 2013?

The 7% provincial part of the HST no longer applies. The federal part of the HST, the 5% GST, remains.

What is the transitional tax adjustment?

In the transition to the HST in B.C., the transitional tax adjustment applied to sales of grand-parented housing where the provincial part of the HST did not apply on the sale of the housing.

How does the transition from HST to GST affect the transitional tax adjustment?

Under the transition back to the GST in B.C., the transitional tax adjustment applies on the sale of grandparented housing in B.C. only where the tax becomes payable before April 1, 2013. The transitional tax adjustment is generally payable on the earlier of the day possession or ownership of the housing.

What is the provincial transitional new housing rebate (referred to hereafter as the PST transitional new housing rebate)?

In the transition to the HST in B.C., new housing constructed in full or in part prior to July 2010 would have the provincial sales tax (PST) embedded in the cost of the housing. As the sale or self-supply of the housing was to be subject to the HST (or in the case of a grandparented sale, the transitional tax adjustment), the PST transitional new housing rebate was designed to remove the estimated PST embedded in the price of the new housing.

How does the transition from HST to GST affect the PST transitional new housing rebate?

Under the transition back to the GST in B.C., the PST transitional new housing rebate continues to be available only where the HST (or in the case of a grandparented sale, the transitional tax adjustment)applies. If the HST or the transitional tax adjustment does not become payable on the sale of the housing (or the HST does not become payable on a self-supply of the housing), the PST transitional new housing rebate is not available.

What are the general circumstances in which the B.C. transition tax and B.C. transition rebate apply?

The B.C. transition tax applies (and the B.C. transition rebate may be available as discussed in a later section of this notice) on a temporary basis and only where the HST does not apply on the taxable sale of new housing (and the other conditions for the application of the B.C. transition tax, as set out below, are met).

British Columbia Transition Tax

In what circumstances does the B.C. transition tax apply?

The B.C. transition tax generally applies to a builder’s taxable sale of new housing or an interest in the housing, or a self-supply of new housing, where:
– GST becomes payable on or after April 1, 2013 (as such, the HST does not apply) and before April 1, 2015, and
– the construction or substantial renovation of the new housing is 10% or more completed before April 1, 2013.

Who has to pay the B.C. transition tax and how is it calculated?

Other than for a self-supply of housing by a builder, the B.C. transition tax is payable by the purchaser and collected by the builder.

British Columbia Transition Rebate

In what circumstances is the B.C. transition rebate available?

The B.C. transition rebate is available in circumstances where the B.C. transition tax applies to the sale or self-supply of new housing, the construction or substantial renovation of the housing and the “applicable percentage” is not more than 90%.
To read the full GST/HST report, visit the CRA Website