|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
GST/HST Memoranda SeriesNotice to the reader: This is an HTML version of the printed publication. It is also available in other formats. To view an exact rendition of the printed publication, see the .pdf version. 19.3.8 New Housing Rebates and the HSTNOTICE OF CHANGE: January 16, 2002 January 1998 Overview The harmonized sales tax (HST) came into effect on April 1, 1997, in the provinces of Nova Scotia, New Brunswick and Newfoundland-the participating provinces. The HST replaces the GST and the provincial sales tax in these provinces. The harmonized rate is 15% and has two parts: a 7% federal component and an 8% provincial component. New housing rebates are available for the federal component of the HST charged on sales of new housing in these provinces in the same manner as new housing rebates are available for the GST in the rest of Canada. In addition, in Nova Scotia, a new housing rebate is provided for part of the provincial component of HST for newly constructed units in that province. While eligibility for new housing rebates under the HST generally follows the rules for rebates under the GST, there are particular considerations that are specific to new housing rebates in the participating provinces. These are discussed under the following headings: Disclaimer The information in this memorandum does not replace the law found in the Excise Tax Act and its Regulations. It is provided for your reference. As it may not completely address your particular operation, you may wish to refer to the Act or appropriate Regulation, or contact a Canada Revenue Agency (CRA) GST/HST Rulings Centre for more information. These centres are listed in GST/HST Memorandum 1.2, Canada Revenue Agency GST/HST Rulings Centres. If you wish to make a technical enquiry on the GST/HST by telephone, please call the toll-free number 1-800-959-8287. If you are located in the Province of Quebec, please contact Revenu Québec by calling the toll-free number 1-800-567-4692 for additional information. Note
Housing rebates in the participating provincesSame requirements as GST 1. New housing rebates provided under sections 254, 254.1, 255, and 256 apply to the federal component of HST collected on supplies by way of sale of new or substantially renovated housing in the participating provinces under the same conditions as they apply to the GST in the rest of Canada. For information about the conditions under which a GST/HST new housing rebate may be claimed, see the following sections in the GST/HST Memoranda Series: s 254
Section 19.3.1 Rebate for Builder-Built Unit (Land Purchased)
s 254.1 Section 19.3.2 Rebate for Builder-Built Unit (Land Leased) s 255 Section 19.3.3 Rebate for Co-operative Housing s 256 Section 19.3.4 Rebate for Owner-Built Homes Effective April 1, 1997 2. In addition to the rebate that applies to the federal component of the HST in the participating provinces, the Excise Tax Act provides a rebate that applies to the provincial component of the HST for housing situated in Nova Scotia. See paragraphs 9 to 19 of this Memorandum.
Calculating the rebate on the federal componentCalculated on 7/15 HST 3. New housing rebates are calculated on the federal component of the HST in the same manner as new housing rebates are calculated on the GST in the rest of Canada. Example: For example, the new housing rebate that applies to the federal component of the HST for a qualifying, newly constructed or substantially renovated single unit residential complex purchased from a builder together with the related land is calculated as follows:
if the purchase price = $100,000 then HST ($100,000 × 15%) = $15,000 and the new housing rebate = $2,520 more than $350,000 - less than $450,000 subpara 254(2)(h)(i)
A × ($450,000 - B) $100,000 where: A is the lesser of $8,750 and 36% of the total tax paid by the particular individual under subsection 165(1), i.e., the federal component of the HST, and B is the total consideration; thus: if the HST-excluded price = $400,000 then HST ($400,000 × 15%) = $60,000 the federal component of HST ($400,000 × 7%) or ($60,000 × 7/15) = $28,000 rebate = (A × ($450,000 - B)) / $100,000 = ($8,750 ×($450,000 - $400,000)) / $100,000
= $4,375 $450,000 or more
Rebate paid or credited as part of value of considerationRebate forms part of the value of consideration 4. Often the amount of the new housing rebate forms part of the purchase price for the unit. For example, if a builder agrees to accept an amount plus the rebate as the purchase price for the unit, the rebate forms part of the value of consideration. In such a case, the value of consideration must be calculated before the tax liability can be determined. Similarly, the tax liability must be calculated before the amount of the rebate can be determined. To derive these amounts a "rebate factor" must be used. Different rebate factors 5. Subsection 19.3.1.1, Rebate Forms Part of the Value of Consideration of this chapter explains these concepts in detail. However, the tables and formulas given in Subsection 19.3.1.1 apply only in the non-participating provinces. The calculations are different in the participating provinces where the HST applies. Calculating the rebate in New Brunswick and NewfoundlandHST-included amount 6. The following illustrates how to calculate the value of consideration by using the rebate factor in cases where:
Calculating the rebate factor Calculating the rebate factor: consideration for the sale 100.00% plus: tax (HST) 15.00%
tax-included consideration 115.00% less: rebate on federal component of the HST (36% of 7%) (2.52%)
amount for the sale that excludes the rebate and includes the tax 112.48%
rebate factor 1.1248 Example A: HST-included amount Using the rebate factor To determine the value of consideration of a unit with a HST-included price of $100,000 where the rebate is credited as part of the value of consideration: value of consideration = HST-included price ÷ rebate factor thus: value of consideration = $100,000 ÷ 1.1248 $88,904.69
100.00%
tax payable = $88,904.69 × 15% $13,335.70
15.00%
New housing rebate on the federal component of the HST = $88,904.69 × 7% × 36% or ($2,240.40) (2.52%) amount for the sale that excludes the rebate and includes the tax = $100,000.00
112.48%
Example B: HST-excluded amount Using the rebate factor
To determine the value of consideration of a unit with an HST-excluded price of $100,000 where the rebate is paid or credited as part of the value of consideration, the calculation is: value of consideration = (purchase price + tax amount) ÷ rebate factor value of consideration = ($100,000 + (100,000 × 15%)) ÷ 1.1248 $102,240.40
100.00%
tax payable = $102,240.39 × 15% $15,336.06
15.00%
New housing rebate on the federal component of the ($2,576.46) (2.52%) amount for the sale that excludes the rebate and includes the tax = $115,000.00
112.48%
Rebate factors change 7. As noted in paragraph 3, once the value of consideration exceeds $350,000, the amount of the rebate on the federal component of the HST begins to decrease. Where the value of consideration reaches $450,000, no rebate is available on the federal component. Because of this decrease in the amount of the rebate, the rebate factor changes as the value of consideration increases. Appendix 1: Tables for New Brunswick and Newfoundland 8. To determine the value of consideration for a unit, consult the tables in Appendix 1 to this Section. These tables show the results where rebate factors have been applied to a common range of prices. They list the value of consideration, HST tax liability and the new housing rebate on the federal component of the HST for units built by a builder and sold together with the related land in the provinces of New Brunswick and Newfoundland after March 31, 1997. If the price for your unit is not listed in the table, the required values can be computed using the formulas. Rebates in Nova ScotiaRebate in addition to federal rebate ss 254(2.1) 9. Effective April 1, 1997, individuals who satisfy certain conditions can apply for a rebate of part of the provincial component of the HST if they:
ss 254.1(2.1)
ss 255(2.1)
ss 256 (2.1)
This additional rebate is referred to as the "Nova Scotia rebate". Timing 10. The timing provisions that apply to applications for the rebate on the federal component also apply to rebate applications for the Nova Scotia rebate. The Nova Scotia rebate is calculated and claimed on the same form as GST/HST new housing rebates-form GST 190, GST/HST New Housing Rebate Application. Nova Scotia rebate for qualifying units purchased from a builderPurchased from a builder 11. The rebate of the provincial component of the HST for a newly constructed or substantially renovated residential complex or residential condominium unit that is purchased from a builder together with the related land is 18.75% of the provincial component of the HST to a maximum of $2,250. No upper threshold 12. To qualify for a rebate of part of the federal component of the HST, the value of consideration for a housing unit must be less than $450,000. However, there is no upper threshold affecting eligibility for the Nova Scotia rebate. Nova Scotia rebate for building onlyRebate for building only 13. If an individual purchases a newly constructed or substantially renovated single unit residential complex or a residential condominium unit from a builder and leases the associated land from the builder, the purchaser may apply for a rebate of part of the federal component as well as part of the provincial component of the HST that is imbedded in the purchase price. The rebate of part of the provincial portion of the HST is available only if possession of the complex is given to the individual under the agreement for the supply of the complex after March 1997 and the agreement is not an agreement in writing entered into before October 24, 1996. 14. The Nova Scotia rebate is 1.39% of the total consideration payable for the building and related structures to a maximum of $2,250. Note that the rebate for the federal component of the HST is reduced where the total amount paid for the structure or unit exceeds $374,500 and is eliminated when the amount reaches $481,500. These thresholds do not apply to the additional Nova Scotia rebate. Nova Scotia rebate and co-operative housingCo-operative housing rebate 15. An individual who purchases a share of the capital stock in a cooperative housing corporation may qualify for a housing rebate. If an individual qualifies for a rebate on the federal component and the share is in respect of a cooperative housing unit in Nova Scotia, the individual may apply for an additional rebate in respect of the provincial component of the HST. The rebate in respect of the provincial component of the HST is available only if the cooperative has paid tax under subsection 165(2), i.e., has paid the provincial component of the HST, in respect of a taxable supply to the cooperative of the complex. 16. The rebate in this case is 1.39% of the total consideration paid for the share to a maximum of $2,250. Note that the rebate for the federal component of the HST reduces where the total amount paid for the share exceeds $374,500 and is eliminated where the amount reaches $481,500. These thresholds do not apply to the additional Nova Scotia rebate. Nova Scotia rebate and owner-built housingOwner-built homes ss 256(2.1) 17. Under the GST, a rebate is provided for part of the tax paid by an individual who constructs or substantially renovates his or her own primary place of residence or hires another person to do so. The eligibility requirements for a GST new housing rebate or the federal component of the HST in respect of owner-built housing are described in Subsection 19.3.4, Rebate for Owner-Built Homes. Not substantial renovation 18. If an individual qualifies for the rebate in respect of the federal component of the HST, and the particular unit is in Nova Scotia, the individual is eligible to claim a rebate of part of the provincial component of the HST. However, this additional rebate is not available where an individual substantially renovates the home or engages another person to do so. 19. The rebate in this case is 18.75% of the provincial component of the HST to a maximum of $2,250. Note that the rebate for the federal component of the HST reduces where the fair market value of the unit at the time of substantial completion is greater than $350,000 and is eliminated where the fair market value of the unit reaches $450,000. These thresholds do not apply to the additional Nova Scotia rebate.
Nova Scotia rebate paid or credited as part of the value of considerationPaying or crediting the rebate 20. As with the rebate on the federal component, the Nova Scotia rebate may be paid or credited to a qualifying purchaser by a builder. If the builder has paid or credited the Nova Scotia rebate to a qualifying purchaser, and if the builder transmits the purchaser's rebate application to the Department, the builder may reduce the amount of net tax to be remitted for the reporting period in which the amount is paid or credited by the amount of the rebate. This is also the case with the rebate of the federal component. 21. Similar to the situation noted in paragraph 4, if a builder agrees to accept an amount plus the rebate or rebates (the Nova Scotia rebate and the rebate of the federal component of the HST) as the purchase price for the unit, the rebate or rebates form part of the value of consideration. 22. In such a case, a rebate factor must be used to calculate the value of consideration. Once the value of consideration is known, the tax liability can be calculated. Once the tax liability is known, the amount of either rebate can be determined. Example A: The following example illustrates how to calculate the value of consideration by using the rebate factor in cases where:
Calculating the rebate factor Calculating the rebate factor:consideration for the sale 100.00% plus: tax (HST) 15.00%
tax-included consideration 115.00% less: rebate on federal component of the HST (36% of 7%) (2.52%)
less: Nova Scotia rebate (18.75% of 8%) (1.50%)
amount for the sale that excludes the rebates and includes the tax 110.98% rebate factor 1.1098
Using the rebate factor To determine the value of consideration of a unit with an HST-included price of $100,000 where both rebates are paid or credited as part of the value of consideration for the a unit bought from a builder together with the related land, the calculation is: value of consideration = HST-included price ÷ rebate factor value of consideration ($100,000 ÷ 1.1098) $90,106.33
100.00%
tax payable ($90,106.33 × 15%) 13,515.95
15.00%
less: rebate on federa1 component of the HST $90,106.33 × 7% × 36% (2,270.68)
(2.52%)
less: Nova Scotia rebate $90,106.33 × 8% × 18.75% or (1,351.59) (1.50%) Total amount payable on the sale $100,000.00
110.98%
Example B: HST-excluded amount Using the rebate factorTo determine the value of consideration of a unit with an HST-excluded price of $100,000 where both rebates are paid or credited as part of the value of consideration for a unit bought from a builder together with the related land, the calculation is: value of consideration = (purchase price + tax amount) ÷ rebate factor value of consideration ($100,000 + (100,000 × 15%)) ÷ 1.10.98) $103,622.27
100.00%
tax payable ($103,622.27 × 15%) $15,543.34
15.00%
less: rebate on federa1 component of the HST ($103,622.27 × 7% × 36%) or ($2,611.28)
(2.52%)
less: Nova Scotia rebate $103,622.27 × 8% × 18.75% or ($1,554.33) (1.50%) Total amount payable on the sale $115,000.00
110.98%
Appendix 2: Tables for Nova Scotia 23. Appendix 2 to this Section presents the results of applying rebate factors to the common range of prices for units built by a builder and sold together with the related land in the province of Nova Scotia after March 31, 1997. These tables show the value of consideration, HST tax liability and the new housing rebate on the federal component of the HST and the Nova Scotia rebate. Units bought from a builder together with the related land s 254 24. The following tables present the results of applying rebate factors to the common range of prices for units built by a builder and sold together with the related land in the provinces of New Brunswick or Newfoundland after March 31, 1997. These tables show the value of consideration, HST tax liability and the amount of the new housing rebate of the federal component of the HST. Act has authority 25. The tables and the formulas upon which they are based are not meant to replace the provisions of the Act. They are provided solely for convenience. 26. Because the amount of the rebate is gradually reduced where the value of consideration increases from over $350,000 up to $450,000, the rebate factors used to compute the value of consideration change as the value of consideration increases. 27. Throughout the following calculations P represents "price", and C represents "value of consideration". Note that "price" means the HST-included price for a unit with the rebate of federal component forming part of the value of consideration for the unit. To calculate for your situation 28. If you wish to calculate the value of consideration, tax and rebate amount for a purchase price which does not appear in the following tables, choose the table that contains the purchase price that is nearest in value to yours, and use the formulas given at the beginning of the table to calculate the related values.
Table 1: prices up to $390,555 Table 1- For prices up to $390,555:
Table 1 (continued)
Note: The formula that derives C (value of consideration) in Table 1 is: P = C + tax payable - rebate on the federal component
Table 2: prices from $390,556 to $393,750 Table 2-Prices from $390,556 to $393,750:
Note: The formula that derives the value of consideration in Table 2 is: P = C + tax payable - rebate on the federal component
Table 3: prices from $393,751 to $517,500 Table 3-Prices from $393,751 to $517,500:
= ($8750 × $450,000 - value of consideration) / $100,000
Note: The formula that derives the value of consideration in Table 3 is: P = C + tax payable - rebate on the federal component
Units bought from a builder together with the related land s 254 29. The following tables present the results of applying rebate factors to the common range of prices for units built by a builder and sold together with the related land in the province of Nova Scotia after March 31, 1997. These tables show the value of consideration, HST tax liability, the amount of the new housing rebate of the federal component of the HST, and the amount of the Nova Scotia rebate. Act has authority 30. The tables and the formulas upon which they are based are not meant to replace the provisions of the Act. They are provided solely for convenience. 31. Because the amount of the rebate for the federal component of the HST is gradually reduced where the value of consideration increases from over $350,000 up to $450,000, the rebate factors used to compute the value of consideration change as the value of consideration increases. Note that the Nova Scotia rebate for the provincial component of the HST reaches its maximum amount of $2,250 when the value of consideration reaches $150,000. 32. Throughout the following calculations P represents "price", and C represents "value of consideration". Note that "price" means the HST-included price for a unit with the rebate of federal component and the Nova Scotia rebate forming part of the value of consideration for the unit. To calculate for your situation 33. If you wish to calculate the value of consideration, tax and rebate amounts for a purchase price which does not appear in the following tables, choose the table that contains purchase prices that are nearest in value to yours, and use the formulas given at the beginning of the table to calculate the related values. Table 1: prices to $166,470 Table 1-For prices up to $166,470:
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
) has been used to indicate changes.