house under construction in the building phase

Tax Alert: Enhanced GST Rental Rebate

Tax Alert: Enhanced GST Rental Rebate

Synopsis
2 Minute Read

The Federal Government has unveiled an enhanced Goods and Services Tax (GST) Rental Rebate to relieve 100 percent of the GST incurred on construction of specified rental housing projects.

The Enhanced GST Rental Rebate will not apply to individually owned condominium units and single-unit homes (among others), or for substantial renovations to existing residential complexes.

On September 14, 2023, the Federal Government unveiled an enhanced Goods and Services Tax (GST) Rental Rebate (the Enhanced GST Rental Rebate, the enhanced rebate) to relieve 100 percent of the GST incurred on construction of specified rental housing projects.

What we know so far

The Enhanced GST Rental Rebate will apply to new residential buildings with:

  • at least four private apartments or 10 private rooms; and
  • 90 percent of residential units designated for long-term rental.

Projects to convert non-residential buildings into purpose-built rental housing may qualify for the Enhanced GST Rental Rebate. The enhanced rebate is also available to Public Service Bodies.

The Enhanced GST Rental Rebate will not apply to individually owned condominium units and single-unit homes (among others), or for substantial renovations to existing residential complexes. However, the existing GST Rental Rebate of 36 percent will still apply for eligible properties.

Qualifying project construction must begin between September 14, 2023, and December 31, 2030 (inclusive), and be completed by December 31, 2035.

Many details are still outstanding

As no detailed information or draft legislation was released with the announcement, uncertainty remains on how the Enhanced GST Rental Rebate will be implemented and administered, including:

  • Any additional restrictions or requirements for properties to qualify for the enhanced rebate
  • Milestone(s) to be considered the start of project construction to qualify for the enhanced rebate
  • Definitions (e.g., what is considered a “private apartment” or a “private room”)
  • Whether the provinces will implement a similar enhanced rebate program
  • If the enhanced rebate will follow the same application process and timelines as the existing GST Rental Rebate or a separate application process will be involved

While the federal government introduced proposed legislation to the House of Commons on September 21st, these proposals currently do not address the above uncertainties. Further clarification is expected once the government releases regulations and additional guidance on this measure.

We will update this page with further details and insights as they become available.

Contact us

If you have any questions, please contact your local MNP Indirect Tax Advisor.

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