After nearly a year of delays, Bill C-4, the Making Life More Affordable for Canadians Act, is now law. This legislation, specifically designed to increase housing supply, was held up long enough to have the opposite effect, with qualified buyers staying out of the market and builders managing stalled pipelines and uncertain demand. That changes now! With Royal Assent granted on March 12, 2026, builders need to move quickly to understand their obligations under the enhanced First-Time Home Buyer (FTHB) GST Rebate and update their processes accordingly. 

Understanding the Rebate Structure 

For agreements of purchase and sale entered into on or after March 20, 2025, and before 2031, eligible first-time buyers purchasing new homes under $1 million will pay no GST. For homes priced between $1 million and $1.5 million, a partial rebate applies on a sliding scale, up to a maximum of $50,000. No rebate is available on homes above $1.5 million. This relief does not apply to resale properties or those buyers already in the housing market. 

The CRA applies a specific technical definition to determine first-time buyer eligibility. Buyers must be over 18, be a Canadian citizen or permanent resident, not have lived in a home they owned in the five years preceding the purchase, and intend to occupy the property as their primary residence. A buyer’s spouse or common-law partner’s prior ownership history can also disqualify an otherwise eligible buyer. As the party crediting the rebate at closing, builders carry direct financial exposure when a buyer’s eligibility is later challenged by the CRA. Builders should be careful with the language used in agreements to ensure they are not at risk. 

Current Operational Priorities 

The CRA has released forms required to administer the rebate, but there are important steps you can take now to prepare your business: 

  • Review and update your purchase agreement templates carefully. The language used to document buyer eligibility carries real risk. If a buyer is found to be ineligible after the rebate has been credited, liability could fall back on the builder. Work with your legal and tax advisors to include clear representations and warranties from the buyer confirming their first-time buyer status, including representations about their spouse or common-law partner’s ownership history. Including indemnification language that protects your business if that information proves inaccurate will be important. 
  • Train your sales team on eligibility criteria so they can accurately qualify first-time buyers and set appropriate expectations. Confirming eligibility is not a formality; it is a compliance requirement with real financial consequences if handled incorrectly. 
  • Establish documentation protocols for verifying and retaining proof of first-time buyer status, including statutory declarations or signed representations collected at the time of agreement and retained for potential CRA audit. 
  • Audit your recent transactions to identify buyers who took ownership before Royal Assent, as those buyers will need to apply to the CRA directly rather than receiving the credit through your closing process. 
  • Register for the CRA builder-focused webinar once details are released, as it is expected to provide further guidance on compliance and documentation requirements. 

Transitional Rules That Affect Your Risk Exposure 

The transitional rules under Bill C-4 introduce specific risks that builders need to manage carefully. The rebate does not apply to agreements of purchase and sale signed before March 20, 2025, regardless of when closing occurs. Assignment purchases where the original agreement was signed before March 20, 2025, also do not qualify, even if the assignment itself is completed after that date. Additionally, the CRA may disallow the rebate if an existing pre-March 20, 2025, agreement is cancelled and re-signed in an attempt to qualify. Builders should be cautious about how they handle these situations and seek advice before making any changes to existing agreements. 

Purchase prices near the $1 million and $1.5 million thresholds also require close attention. Upgrades, change orders, or lot premiums that push a purchase price over a threshold can reduce or eliminate the rebate entirely, creating disputes at or after closing. Clear documentation of how the final purchase price is determined will be essential. 

Looking Ahead 

Staying informed on these developments will be important as the policy landscape continues to evolve. The Province of Ontario noted in their 2025 Fall Economic Statement that they would follow suit when the Federal government removed the GST on new home sales for first-time buyers, however, there has not been any official announcements or legislation passed as of the time of writing this article. Will this uncertainty on the Ontario portion of HST continue to stall the housing market? Only time will tell. 

While Bill C-4 is a meaningful step, there is ongoing advocacy for broader HST relief that extends to all new home buyers, not just first-time purchasers.  Since Bill C-4 received Royal Ascent, Premier Ford has publicly pushed for the removal of HST on all new home sales. The rationale for removing the HST on all new home sales is straightforward: enabling move-up and downsizing buyers to purchase new construction would free up entry-level inventory in the resale market and create a more functional housing supply chain across all buyer segments.  

Ontario Update (March 25, 2026): Temporary HST Relief on New Homes  

In addition to the federal GST changes introduced under Bill C-4, the Ontario government, in partnership with the Federal government, announced a separate, time-limited measure that will temporarily remove or reduce the HST on eligible new homes purchased in Ontario. This initiative is distinct from Bill C-4 and applies to a broader group of buyers. 

What this means for builders 

For agreements of purchase and sale entered into on or after April 1, 2026, to March 31, 2027, the full 13% HST will be rebated on qualifying new home sales. New homes with a purchase price under $1 million will have the HST fully removed, while homes priced between $1 million and $1,500,000 will receive a $130,000 rebate. Homes over $1,850,000 will only receive the current $24,000 provincial rebate. 

Builders should review contract language and closing processes to ensure the appropriate sales tax treatment is applied to eligible transactions while we wait for the final legislation and rebate forms that this announcement brings. 

From reviewing your purchase agreement language to navigating GST obligations under Bill C‑4 and the newly announced Ontario HST relief, RLB’s construction and real estate specialists are here to help you manage risk, stay compliant, and respond confidently as the rules continue to evolve. Connect with your trusted RLB Advisor to ensure your business is prepared and protected.