The British Columbia Minister of Finance (the
"Minister") has started to issue the rules that will
guide the Province's transition back to a combined Goods and
Services Tax and Provincial Sales Tax ("GST/PST") system.
As an initial step, the Minister has set April 1, 2013 as the date
of the transition and has published a set of rules governing the
taxation of newly constructed homes.
These initial transitional rules are meant to minimize the
potential disruption of the construction industry and ensure new
homes purchased after April 1, 2013 are taxed consistently whether
they were built entirely under the Harmonized Sales Tax
("HST"), entirely under the PST or partly under the HST
and partly under the PST. Under this set of rules, the Province has
enhanced the new home rebate available to purchasers, implemented a
transitional housing tax and imposed additional disclosure
requirements on builders.
In addition to these transition rules for new homes, described
more fully below, detailed PST transition rules for specific types
of transactions, including goods brought, sent or delivered into
British Columbia and goods used in the improvement of real
property, will soon be made available by the Minister.
General Transition Rules – Housing
In general, a combined 12% GST/PST will replace the 12% HST on
goods or services that are taxed on or after April 1, 2013. Certain
goods and services will, however, become exempt from the 7% PST
after the transition occurs and will only be subject to 5% GST.
These goods and services, which were exempt from PST prior to the
implementation of the HST, include new homes, real estate
commissions, moving services and home renovation services. Due to
the nature of new home sales and the long periods involved in home
construction, the Province has implemented rules that will help
maintain tax fairness during the transition.
New Housing Rebate
These transitional rules include changes to the Province's
New Housing Rebate program. Currently, purchasers of new or
substantially renovated homes ("new homes"), which are
subject to the HST, receive a rebate of 71.43 percent of the
provincial component of the HST paid, up to a maximum of $26,250.
Under the transitional rules, purchasers will be eligible to
receive the same percentage of HST up to a maximum of $42,500. This
enhanced rebate will be available for taxes paid between April 1,
2012 and April 1, 2013. Special rules apply if the new home under
consideration is a secondary residence, vacation home, rental home
or if the transfer of the home is considered the self-supply of a
As part of these changes a date has also been set for the
termination of the New Housing Rebate program. In order to receive
an existing or enhanced New Housing Rebate, applications must be
completed prior to April 1, 2017.
Transitional Housing Tax
The Province has also announced a two percent transition tax on
the sale of new homes after April 1, 2013. The transition tax will
apply if HST does not apply, the home is ten percent or more
completed as of April 1, 2013 and ownership or possession occurs
(or self-supply is deemed to have occurred) before April 1,
To offset this transitional tax and to prevent double taxation
of the home buyer, a transitional rebate will also be available to
builders of newly constructed homes. This rebate will be based on
the portion of the construction that has been completed as of April
1, 2013 and the overall consideration paid for the home.
Disclosure Requirements for Builders
In order to ensure the modified taxes and rebates are clearly
described in agreements of purchase and sale for new homes,
builders will be required to make certain disclosures to purchasers
and to the Canada Revenue Agency. These requirements have already
been implemented and will apply to any agreement of purchase and
sale entered into after February 17, 2012 and before April 1, 2015.
Compliance with these disclosure requirements is mandatory and
penalties will be imposed on builders who fail to provide adequate
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