On September 14, 2023, Prime Minister Justin Trudeau announced plans to introduce new legislation to enhance the GST Rebate on new rental apartments. The new legislation is intended to incentivize construction of new rental homes and improve housing affordability for Canadians.
The enhancement increases the GST rental rebate from 36% to 100% of GST paid on the sale of a new residential rental property. It also removes the current phase-out thresholds beginning for units valued greater than $350,000 and fully eliminated when the value exceeds $450,000.
Currently this change only applies to the 5% GST. It is currently unclear whether harmonized provinces such as Ontario may extend these rules to the provincial portion of HST.
When does the enhanced rebate apply?
Although draft legislation has not yet been released, the enhanced GST Rental Rebate will apply to projects that:
- Begin construction on or after September 14, 2023, and on or before December 31, 2030; and
- Complete construction by December 31, 2035.
Which units qualify for the rebate?
Qualifying new residential units would be those that qualify for the existing GST Rental Rebate and are in buildings with at least:
- Four private apartment units (i.e., a unit with a private kitchen, bathroom, and living areas), or at least 10 private rooms or suites (e.g., a 10-unit residence for students, seniors, or people with disabilities); and,
- 90% of residential units designated for long-term rental.
For clarity, the enhanced GST Rental Rebate will not apply to individually owned condominium units, single-unit housing, duplexes, triplexes, housing co-ops, and owned houses situated on leased land and sites in residential trailer parks. However, these units may still qualify for the existing GST Rental Rebate.
As the new legislation is intended to increase the housing supply, the enhanced GST Rental Rebate will not apply to substantial renovations of existing residential complexes.
For assistance with GST/HST, contact us and ask to speak to a member of our HST team.
