The soft housing market and the need for housing have motivated the federal and provincial governments to try stimulating new home construction. The federal government recently enacted measures related to the new federal First-Time Home Buyers’ (FTHB) rebate and the Purpose-Built Rental Housing (PBRH) rebate for student residences. Ontario also proposed several changes to provincial housing rebates, including the temporary enhancement of the Ontario HST rebate for eligible buyers of new homes and new residential rental properties, and a temporary Ontario FTHB rebate. Current housing market conditions are causing some home buyers to default on their purchase agreements and forfeit their deposits and also causing certain builders to convert units from for-sale inventory to rental housing. These market responses can cause builders to face additional GST/HST challenges by triggering specific tax obligations and additional tax costs. Builders must quickly adjust their processes to all these tax measures and market changes, while carefully assessing the impact on their GST/HST obligations, rules and deadlines.
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