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Ottawa, December 28, 2001
2001-127

Release of Draft GST/HST Amendments for January 1, 2002

Related Documents:

• Backgrounder.
• Draft Amendments to the Excise Tax Act.

Finance Minister Paul Martin today released draft amendments to the Excise Tax Act relating to two measures under the goods and services tax/harmonized sales tax (GST/HST) that are proposed to take effect January 1, 2002.

First, the draft amendments modify the existing New Housing Rebate for the provincial portion of the HST in the Province of Nova Scotia. As announced by the Government of Nova Scotia in its 2001 budget, this rebate will be targeted to first-time homebuyers and capped at a new maximum, starting on January 1, 2002.

The second proposed measure extends, to the end of 2002, the GST/HST exemption for speech therapists’ services. This will allow additional time for the completion of a regulatory process now underway that will result in these services meeting the criteria for exemption under the GST/HST on a permanent basis.

The attached backgrounder and draft of the proposed amendments provide further details on these measures.

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Backgrounder

Nova Scotia First-Time Homebuyers’ HST Rebate

The Excise Tax Act provides for a partial rebate of the goods and services tax (GST) in respect of the purchase or construction of new homes. In addition, for new homes situated in Nova Scotia, the Nova Scotia HST New Housing Rebate provides a partial rebate of the provincial portion of the harmonized sales tax (HST) in that province.

The existing Nova Scotia HST New Housing Rebate for qualifying new homes is equal to 18.75 per cent of the provincial portion of the HST paid (or 1.5 per cent of the pre-tax purchase price), to a maximum of $2,250. The maximum is reached at a pre-tax home price of $150,000.

As announced in Nova Scotia’s 2001 budget, the Nova Scotia HST New Housing Rebate will be amended to target the rebate to first-time homebuyers, effective January 1, 2002. Further, the maximum rebate will be reduced to $1,500.

To qualify as a first-time homebuyer, the individual and their spouse or common-law partner must not have been an owner-occupant of a home in Canada within the preceding five years. For purchased homes, the five-year period will be determined from the earlier of the date on which ownership or possession of the new home is transferred to the individual. For owner-built homes, the five-year period will be determined from the date of substantial completion of the new home.

Corresponding rules will apply in the case of the Nova Scotia rebate in respect of co-operative housing units.

For purchased homes, the new rebate rules will apply where:

• the agreement of purchase and sale is entered into after 2001;
• the new home is first occupied as the primary place of residence of the purchaser, or a relation of the purchaser, after June 2002; or
• ownership and possession of the new home are transferred to the purchaser after June 2002.

For owner-built homes, the new rebate rules will apply where:

• the building permit for the construction of the new home is issued after 2001; or
• the new home is first occupied as the primary place of residence of the owner, or a relation of the owner, after June 2002.

Speech Therapy Services

The proposed measure extends, to the end of 2002, the GST/HST exemption for speech therapy services. This will allow additional time for the completion of a regulatory process now underway that will result in these services being regulated in at least five provinces. Speech therapy services will thereby meet the criteria for exemption as a health care service under the GST/HST.

Once the practice of speech therapy is regulated as a health care profession in at least five provinces, a further amendment would be proposed to permanently add speech therapy services to the list of exempt health care services for the purposes of the GST/HST.