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On May 31st, 2012, the Province of British Columbia passed Bill 56, the New Housing Transition Tax and Rebate Act. This bill set out special transitional rules that apply to new housing transactions where at least 10 percent of the construction occurs before April 1st, 2013. In addition to the bill, the government issued Notice 276: Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing. The notice outlines the specific information requirements that builders need to provide to purchasers for transactions affected by this bill and the steep penalties that builders could face if these requirements and deadlines aren’t met.
These rules apply to contracts of purchase that have been entered into after February 17th, 2012 for a new home.
If the vendor fails to fully and accurately disclose the required information, a penalty of up to one percent of the purchase price of the housing will be imposed (up to a maximum penalty of $10,000 per sale). If the vendor is deemed to have knowingly, or as a result of gross negligence, made or participated in making a false statement
or fails to fully and accurately disclose the required information, a penalty of up to four percent will be imposed (up to a maximum of $40,000 per sale).
The information must be provided in the agreement for purchase and sale. There is additional information which must be included in the Statement of Adjustments
when the transaction closes.
There may be cases where there is no statement of adjustments or where the information must be provided before the statement of adjustments is prepared.
Yes, if the written agreement of purchase and sale was entered into on or after February 17th, 2012, before December 1st, 2012 and closing after December 31, 2012, you
are required to provide the necessary addendums to the purchaser on or before January 2nd, 2013. Given the detail required in these documents, even vendors who are
not required to meet the January 2nd deadline are urged not to wait to begin adjusting their documentation.
In order to ensure that your documentation includes all necessary information, you should consult with your MNP advisor immediately.
Related Topics:Indirect Tax; Legislation
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