Lack of housing for regular people has long been a crisis in Canada. Governments at all levels – Federal, Provincial and Municipal – are implementing various incentives for residential construction. One recent incentive announced by the Department of Finance Canada on September 14, 2023, is the enhanced GST rebate. We are still waiting for the actual legislation to implement this rebate. But we are told it will be available for any new qualified rental unit for which construction began after the announcement date noted above.
What we are told to expect, is that the “enhanced” rebate will make two key improvements to the existing GST rebate for new residential construction. First, the existing rebate provides a refund of 36% of the GST payable on the sale or lease of new residential housing. However, the enhanced rebate will apply to 100% of the GST payable. Second, the existing rebate only applies in full to rental units valued at less than $350,000, and then the partial rebate is phased out entirely if the value exceeds $450,000. Conversely, the enhanced rebate will apparently apply in full to units of any value with no ceiling. It should be noted that the official government announcement did not expressly confirm this, but implied it through illustrations. We’ll update this article with reference to the legislation at a later date.
To be eligible, newly constructed buildings must have at least four private apartment units (not condominium units, duplexes or triplexes), or at least 10 private rooms in a shared residence. Also, 90% of the rental units must be designated for long-term rental.
The government hopes that incentives like the enhanced GST rebate will bring more people into residential construction. If you are considering this and are new to development, the real estate lawyers at Morelli Chertkow are well qualified to guide you through the legal processes.
Disclaimer: This is not legal advice.