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McKinnon Germann Granger: Chartered Professional Accountants Duncan, BC

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Transition Tax & Rebate, Requirements & Penalties

To: Home Builders

Transition Tax & Rebate

Homes that were under construction or completed before April 1, 2013 and sold thereafter will only by subject to 5% GST. However, a transition tax of 2% will apply to the selling price where homes were at least 10% complete before April 1, 2013.

This transition tax is payable by the purchaser and collected by the builder. Builders who have paid PST on their construction materials will be eligible for a transition rebate if the housing is at least 10% complete but not more than 90% complete before April 1, 2013. The rebate will be based on the purchase price of the house and the degree of completion immediately prior to April 1, 2013. 

Requirements & Penalites

  The builder should ensure that written agreements of purchase and sale include:

The builder should also ensure that the following is disclosed in writing to the buyer at the time of sale:

 If a builder fails to fully and accurately disclose the required information, a penalty of up to 1% of the home price, to a maximum of $10,000 can be assessed. If the circumstances indicate gross negligence the penalty can be as high as 4%, with a $40,000 maximum.

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Transition Tax & Rebate, Requirements & Penalties

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