The GST Construction Rebate: What does it mean for developers?

In this episode, BDO’s Thomas Kontogianis, Ken Garth, and George Tadross break down the GST/HST recovery opportunity for builders of residential rental properties. They will walk you through the complexities of enhanced tax relief and how it can potentially unlock significant financial advantages for your upcoming projects. Tune in for actionable strategies that could positively impact developers considering new construction.

Guest information

Host: Thomas Kontogianis, Partner, Assurance and Accounting

Guests:

Ken Garth, Partner, Indirect Tax  

George Tadross, Senior Manager, Indirect Tax Services

What you’ll hear in this episode

[1:28] GST on residential rental construction in Ontario

[4:30] Details on the Purpose-Built Rental Housing Rebate

[6:14] Government purpose of the new rebate

[7:12] Effects of the new rebate on the REC industry

[9:51] Provincial alignment with GST changes

[11:11] Impacts on the rest of supply chain and the industry

[12:42] Additional insights on the rebate  

Quotes

“Everyone knows that right now we're in the middle of a very serious housing crisis. I mean, there's a lack of affordable rental housing. People just can't find places to live. I think one of the things we need to start with to frame this is a lot of people aren't familiar with exactly how the GST works on a residential rental construction.”

“What a lot of people don't realize is when that building is completed and rented, the builder has to pay GST or HST depending on where you're living to Canada Revenue Agency based on the value of the property when it's completed.”

“It's referred to as the Purpose-Built Rental Housing Rebate, and it's basically an enhanced version of the existing new rental rebates. It's designed to effectively eliminate GST and possibly HST, especially in Ontario, on certain new housing construction projects.”

“Number one, they're (federal government) looking to reduce the cost of housing across the country because we all know housing has just become unaffordable for people, including for renters, not just owners. The second thing they're trying to do is they really want to increase the supply of these large multi-unit residential properties because people need a place to live and we just don't have enough supply these kinds of units right now.”

“The new rebate doesn't apply to condominium units, there's going to be an inconsistent treatment of rental condominiums versus apartment buildings. If you built a multi-unit residential apartment, you'll be eligible for the new rebate. Whereas if you build a condominium tower with a number of condo units, you won't qualify.”

“With respect to other HST provinces or the HST provinces, obviously Ontario is the biggest driver of this change given the population. I would say Ontario probably more than other provinces, have the most drastic need for housing at the moment.”

“We could see that this is a significant win for large apartment builders because it'll definitely impact the profitability of their projects and over time hopefully increase the supply of rental units and apartments.”