CRA Auditing – HST New Housing Rebates

Goods and Services Tax/Harmonixed Sales Tax (GST/HST) New Housing Rebate

Goods and Services Tax/Harmonized Sales Tax (GST/HST) New Housing Rebate

The Canadian Market

The housing market in Toronto and the suburbs has been booming over the last several years. This has allowed investors from all over the world to cash in. The strategy was to purchase a newly constructed home or condominium unit from the builder and sell it a few months later for profit. This strategy seemed like people had finally figured out how to pull ahead in this struggling economy. For some this had even become a full time job with endless rewards. With the Canada Revenue Agency (CRA) only taxing half of the capital gain this was the right way to retain your money.

HST New Housing Rebate

With the CRA looking to increase tax revenues they started reviewing the New Housing Rebate applications  and determined a large number of people had claimed the GST/HST New Housing Rebate incorrectly. They were able to determine a large number of investors never even moved into the newly constructed property but they had sold it few months after they took possession. In this case they would not qualify for the rebate and they would be required to pay the HST balance to the CRA. A lot of investors had already sold the property and had failed to collect HST on the sale, which would mean they were still required to pay back the HST. This was a sticky situation with some investors on the hook for over $24,000. In some instances the CRA waited 3 years to reassess the taxpayer.

HST Rental Rebate

Investors which have rented the property were safe because the government still had a different rebate program for them. They were able to apply for the rental rebate program and recover most of the money. The CRA steps for the New Residential Rental Property Rebate have become more difficult over the last two years.  CRA has also begun charging interest and penalties on the outstanding rebate amounts.

Guilty Until Proven Innocent 

Many individuals with legitimate purchase have also become targets for the CRA. Individuals who purchased properties and sold them quickly for unforeseen circumstances have also received notices from the CRA. The denial is made on the basis that the taxpayer did not purchase the home as a primary place of residence. The CRA is making it extremely difficult for taxpayers to prove their claim. Taxpayers are confused and frustrated not knowing what step to take next. Not all hope is lost, taxpayers can appeal the auditors decision through appropriate channels and resubmit appropriate evidence.

GST/HST New Housing Rebate guide 

1 reply
  1. Andrew Silva
    Andrew Silva says:

    It was a pleasant experience working with Sarb. He is a true professional and got my $26,000 back from the CRA. Thank you for preparing my Notice of Objection for my new house. Best service in town.

    Kinds Regards,

    Andrew Silva.


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