Insights Header image
Insights Header image
Insights Header image

Budget 2016: Reporting of “Grandfathered” New Home Sales

April 2016 Tax Bulletin 2 minute read

Historically, builders have found themselves in situations where they enter into agreements of purchase and sale in respect of new homes and, subsequent to entering into the agreements, but prior to the close of the transactions, the government announces that the relevant provincial sales tax will be harmonized with the GST or that there will be an increase in the HST rate. Where such proposed HST changes are implemented prior to the close of the new home sales, the sales are generally relieved from either the provincial component of the HST, or the HST rate increase, as applicable (“Grandfathered Sales“).

Currently, builders are required to report certain information relating to Grandfathered Sales on their electronic GST/HST returns in cases where the purchaser was not entitled to a GST New Housing Rebate or a GST New Residential Rental Property Rebate (the “Rebate“). Failure to report this information on a return could result in the imposition of penalties against the builder.

To simplify the reporting obligations of builders, Budget 2016 proposes to limit the information reporting requirements of builders to Grandfathered Sales with a purchase price of $450,000 or more (i.e., those sales with a purchase price that exceeds the threshold for receiving a Rebate). This measure will apply in respect of any reporting period that ends after March 22, 2016 (the “Budget Day“). In addition, builders will also be permitted, for a limited period of time, to correct certain past reporting errors, by making an election (the “Election“) that will apply to Grandfathered Sales that occurred before Budget Day and, in limited circumstances, after Budget Day. By making the Election, Budget 2016 gives builders the opportunity to correct past reporting errors relating to Grandfathered Sales of $450,000 or more without the imposition of penalties.

To correct past reporting errors, builders will generally have to make the Election and report the required information on a current GST/HST return for a reporting period ending on or after May 1, 2016 and before 2017. The required Election is to be completed on the prescribed form and filed with the Canada Revenue Agency on or after May 1, 2016, but no later than the due date for filing the GST/HST return for the particular reporting period. The Election will apply to Grandfathered Sales in respect of which the federal component of HST became payable on or after July 1, 2010, but before the end of the particular reporting period.

by Jamie M. Wilks and Jennifer Allman, Student-at-Law

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016

Insights (5 Posts)View More

Featured Insight

The Latest Risk to the BC Natural Resource Sector: Government Uses Little Known Law to Freeze Mining Rights Unless First Nations Consent

BC's government has issued unprecedented orders, to prohibit mining activity in certain areas, unless First Nations consent.

Read More
Mar 11, 2024
Featured Insight

Canada’s New Policies on Investments in the Interactive Digital Media Sector

On March 1, 2024, the Canadian government introduced new policies to increase scrutiny of foreign investments in Canada's Interactive Digital Media sector.

Read More
Mar 6, 2024
Featured Insight

Duty to Mitigate Part II – Revenge of the Job Offer

Ontario's Superior Court of Justice found that a terminated employee failed to mitigate by refusing to accept an offer of comparable employment.

Read More
Mar 5, 2024
Featured Insight

Storm Clouds Looming: The Impact of Competition Act Changes on Leasing

Our upcoming seminar will help tenants and landlords prepare for anti-competitive agreement changes under the Competition Act, as summarized in this bulletin

Read More
Mar 4, 2024
Featured Insight

A Word of Caution: Company Liable for Misrepresentations Made by Chatbot

Tribunal finds that a website chatbot is not a separate legal entity and holds company liable for the chatbot's misrepresentations.

Read More
Mar 4, 2024