GOODS AND SERVICES TAX REBATE FOR PURCHASERS OF NEW RESIDENTIAL PROPERTY
Goods and Services Tax ("G.S.T.") is payable on the purchase of a new home. The G.S.T. is equal to 6%, however, a rebate is available in certain cases.
For homes with a fair market value of under $350,000.00, a rebate is available of 36% of the G.S.T. For example, if the fair market value is $300,000.00, the gross G.S.T. would be $18,000.00 (6% of $300,000.00). The rebate would then be $6,480.00 (36% of $18,000.00). Thus the net G.S.T. would be $11,520.00 ($18,000.00 less $6,480.00).
For homes with a fair market value of $450,000.00 or more, no rebate is available. G.S.T. in the amount of 6% is payable on the entire purchase price.
For homes valued between $350,000.00 and $450,000.00, the rebate is gradually reduced and is calculated by using the following formula:
A X ($450,000.00 - B) / $100,000.00
"A" is the lower of $8,750.00 or 36% of the G.S.T. and "B" is the greater of $350,000.00 or the fair market value of the home. For example, assume the value of the home is $400,000.00. The rebate would equal:
$7,560.00 X ($450,000.00 - $400,000.00) / $100,000.00 = $3,780.00
Using this example, the G.S.T. payable would be $24,000.00 (6% of $400,000.00) less $3,780.00 which would equal $20,220.00.
Note that this rebate is only available to individuals and a company is not eligible for this rebate.
Please remember that the rules regarding G.S.T. may be changed at any time by the federal government. The information above is accurate as of the date of writing but please review the government website or discuss your situation with your accountant to ensure the proper amount of taxes are being paid. If you do not have an accountant, we would be happy to refer you to our partners, Newport Group of Chartered Accountants, part of Bell Spagnuolo Professional Services.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice regarding your own situation.
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