British Columbia released a notice providing details of the rebates available on the purchase or construction of newly built or substantially renovated homes, and the transitional rules on these homes as the province moves from HST to GST and PST effective April 1, 2013. This document reiterates what was released by the province earlier in the month.
Generally, the new homes must be used primarily as a place of residence by individuals in order for these rules to apply. Some of the temporary and transitional measures introduced by the province include the following:
- Temporary new housing rebates available on the purchase or construction of new homes generally equivalent to 71.43% of the provincial part of HST paid, up to a maximum of $42,000. This rebate is available on purchases or construction costs of new homes on or after April 1, 2012 and before April 1, 2013. Note the increase from the existing maximum rebate amount of $26,250.
- Temporary new rental housing rebates available for landlords who purchase or substantially construct or renovate new rental housing. The rebate is equivalent to 71.43% of the provincial part of HST paid, up to maximum rebate of $42,000. This rebate is available on purchases or construction costs of homes on or after April 1, 2012 and before April 1, 2013. Note the increase from the existing maximum rebate amount of $26,250.
- Temporary housing transition tax equal to 2% on the purchase of new housing that is not subject to HST where construction was completed, or partially (at least 10%) completed, prior to April 1, 2013. This tax will also apply to certain deemed sales of new housing on or after April 1, 2013.
- Temporary housing transition rebates for builders of newly constructed housing based on the degree of completion as of April 1, 2013 and the new housing price, where they have paid PST on materials incorporated into the construction of new housing on or after April 1, 2013. Builders will also be required to share certain information with purchasers regarding the taxes and rebates affecting the purchase price.
Information on the filing and disclosure requirements are also explained in the notice. The penalty for failing to fully or accurately disclose the required information is 1% of the home price, up to a maximum of $10,000 per home. For circumstances where the builder knowingly, or due to gross negligence, disclosed erroneous information, the penalty increases to 4% of the home price, up to a maximum of $40,000 per home.
The filing deadline for the temporary new housing rebates remains the same as the due dates for the existing rebates, which is generally 2 years from the date ownership is transferred, with some exceptions. Either the builder or the purchaser can claim the rebate. If the builder claims the rebate, it should be paid or credited to the purchaser.
The transition tax must be reported on a specified form and filed by the due date for the builder’s GST/HST return in which the GST for the sale of the home is required to be reported. Any transition rebates are permitted to be offset against this transition tax reported in the period.
In addition, there are special rules related to the sale of new homes that straddled both the introduction of HST on July 1, 2010 and the ending of the HST on March 31, 2013 (grandparented and non-grandparented homes).
BC HST Notice #12