April 1, 2013 is the start date for the reinstatement of GST+PST
in B.C. The federal and provincial governments have announced that
they will provide specific transitional rules. On Friday February
17, 2012, some transition rules were released, including rules
dealing with residential real property. These will be of particular
interest to builders and potential or actual buyers of new
The key rules relating to new or substantially renovated
residential property are as follows:
HST & Increased BC New Housing Rebate
New homes where construction is substantially complete before
April 1, 2013 will continue to be subject to 12% HST, even if
closing occurs after March 31, 2013.
The existing BC new housing rebate, which is limited to new
homes with a value of up to $525,000, continues for any purchases
of new homes where closing occurs on or before March 31, 2012.
The BC new housing rebate applies to new homes with a value of
up to $850,000, for purchases from April 1, 2012 to March 31,
The increased BC new housing rebate will also apply to the
purchase of a new secondary vacation or recreational home located
outside of the Greater Vancouver and Capital Regional
Builders are generally expected to credit purchasers the
increased BC new housing rebate arising from the above changes
where they have already agreed to credit the existing BC new
2% B.C. Transition Tax on Purchasers & B.C. Transition
Rebate for Builders
A purchaser is required to pay a 2% B.C. Transition Tax on the
purchase price, which includes the value of the land, where
construction of a new home is at least 10% complete before April 1,
2013 and ownership and possession of that home transfers on or
after April 1, 2013 and before April 1, 2015.
The price in a purchase and sale agreement must exclude the 2%
B.C. Transition Tax.
A builder may claim a B.C. Transition Rebate to recover PST
paid on materials, calculated according to a formula based on
percentage of completion at April 1, 2013. A builder must satisfy
certification requirements to claim this B.C. Transition
Where construction commences on or after April 1, 2013 or is
less than 10% complete on April 1, 2013, the purchaser is only
required to pay 5% GST.
Builders Disclosure Requirements
Effective immediately, builders are subject to new disclosure
A builder is required to provide to the purchaser and the CRA a
prescribed form with defined information at the time the statement
of adjustments are "made", where the purchase and sale
agreement was entered into on or before February 17, 2012.
For purchase and sale agreements entered into after February
17, 2012 and before April 1, 2015, a builder must include in the
- a paragraph prepared by the Province that explains the
application of some of these rules where ownership and possession
transfer on or after April 1, 2013;
- a price that is exclusive of the 2% B.C. Transition Tax and
any applicable builder's B.C. Transition Rebate;
- whether the price is exclusive or inclusive of the 7% BC
component of HST and the BC new housing rebate;
As above, the builder is required to provide to the purchaser
and the CRA prescribed form at the time the statement of
adjustments are made.
Builders that fail to meet disclosure requirements may be
assessed a penalty of 1% of the purchase price to a maximum penalty
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Part I of this series of articles reviewed some of the basic tax requirements for using trusts to split income, and Part II discussed a number of tax planning opportunities that can be accessible through the use of inter vivos trusts.
Based on a host of recently enacted legislation attacking the use of offshore trusts by
Canadians, eliminating immigration trusts, severely restricting testamentary trust tax
benefits, generally attempting to eliminate inter-provincial testamentary tax planning
opportunities, and so on, it seems safe to say that the federal government views the
use of trusts in Canada dimly these days.
Part I of this series of articles reviewed some of the basic tax requirements for using trusts to split income. In the second instalment of the series we will review some common income splitting opportunities that are accessible through the use of trusts.