The Canada Revenue agency has issued two more info sheets which deal with the transitional tax adjustment for builders of housing in Ontario and British Columbia. In the case of a newly constructed or substantially renovated housing unit, the sale of the housing may be grandparented for HST purposes where both ownership and possession are transferred after June 2010, under a written agreement of purchase and sale that was entered into on or before June 18, 2009.GST/HST Info Sheet GI-095 explains how the transitional tax adjustment applies to builders who sell “grandparented housing” in Ontario or British Columbia. When newly constructed or substantially renovated grandparented housing is sold in Ontario or British Columbia, the builder is not required to collect the provincial component of the HST on the sale of the housing; only GST at 5% applies to the sale. However, the builder may be considered to have collected an amount referred to as the transitional tax adjustment and if so, is required to include that amount in its net tax calculation.
GST/HST Info Sheet GI-097 explains how the rules apply to the assignment of grandparented purchase and sale agreements of housing in Ontario and British Columbia. Where the original purchaser enters into a grandparented agreement of purchase and sale for new housing with the original builder, the purchaser may assign the agreement to another person (referred to as the “assignee purchaser”). In turn, that assignee purchaser may assign the agreement to yet another assignee purchaser. If the original builder transfers ownership and possession of the housing to an assignee purchaser after June 2010, the sale of the housing from the original builder to the assignee purchaser is grandparented, under certain conditions, as outlined in the info sheet.