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Enhanced GST Rental Rebate on new purpose-built rental housing
September 19, 2023
John Greenidge shared this article
ARTICLE | September 19, 2023
Executive summary
The Federal Government announced new measures to increase the GST/HST New Residential Rental Property Rebate on new purpose-built rental housing from 36 per cent to 100 per cent and exclude the existing GST Rental Rebate phase-out thresholds for purpose-built rental housing projects. Subject to the passage of implementing legislation, the enhanced GST Rental Rebate will apply to projects that begin construction on or after Sept. 14, 2023 and on or before Dec. 31, 2030, and complete construction by Dec 31, 2035.
Enhanced GST Rental Rebate on new purpose-built rental housing
On Sept. 14, 2023, the Federal Government announced new measures related to the Goods and Services Tax (GST) Rental Rebate on new purpose-built rental housing, such as apartment buildings, student housing and senior residences built specifically for long-term rental accommodation. The measure will increase the GST/HST New Residential Rental Property Rebate from 36 per cent to 100 per cent and exclude the existing GST Rental Rebate phase-out thresholds for purpose-built rental housing projects. Subject to the passage of implementing legislation, the enhanced GST Rental Rebate will apply to projects that begin construction on or after Sept. 14, 2023 and on or before Dec. 31, 2030, and complete construction by Dec. 31, 2035.
According to the proposal, in order to qualify for the enhanced GST Rental Rebate, the new residential units must 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 per cent of residential units designated for long-term rental.
Projects that convert existing non-residential real estate, such as an office building, into a residential complex will be eligible for the enhanced GST Rental Rebate if all other above conditions are met. Public service bodies will also be eligible to access the enhanced GST Rental Rebate. However, 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, but this housing will continue to qualify for the existing GST/HST New Residential Rental Property Rebate (i.e., 36 per cent) where the conditions for this rebate are met.
The provinces of Ontario and Newfoundland and Labrador have also extended the benefit and committed to providing the relief for the provincial part of HST on such rental buildings. British Columbia has committed to removing the PST on the same buildings as well.
Moving forward
Although the enhanced GST Rental Rebate will apply to projects beginning on or after Sept. 14, 2023, this is subject to the Federal Government enacting legislation to implement these measures. If enacted into law, these measures will provide builders of eligible long-term rental accommodations with welcome relief from GST and certain provincial sales taxes.
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This article was written by Clara Pham, Gautam Rishi and originally appeared on 2023-09-19 RSM Canada, and is available online at https://rsmcanada.com/insights/tax-alerts/2023/enhanced-GST-rental-rebate-new-purpose-built-rental-housing.html.
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