In September 2023, the Canadian government introduced an enhanced GST rebate that allows certain new rental housing to claim 100% of the GST. Later in November, the Ontario government announced that they would mirror the federal enhancement by providing the full 8% provincial portion of the HST for eligible properties in Ontario. This rebate is now known as the

GST/HST rebate for purpose-built rental housing (PBRH).

Applicants may qualify for this rebate if their projects meet certain conditions related to property type, percentage of rental, and construction timeline.

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Eligibility of Properties

For a property to qualify as eligible, it must meet

All

of the following conditions:

1. Multiple Unit Residential Complex, must be either:

   (a) Four residential units or more and each containing private kitchen facilities, a private bath, and a private living area. (b) At least ten private rooms or suites.

2. Long-term Residential Rental:

   At least 90% of the residential units must be held for long-term residential rental.

3. Construction Timeline:

   Construction of the project must start after September 13, 2023, but before 2031, and must be substantially completed before 2036. According to the CRA, construction begins when excavation work starts.

4. Qualify for the Current New Resident Rental Rebate:

   Eligible for the existing new resident rental property (NRRP) rebate.

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Conversion of non-residential buildings

Conversion of non-residential buildings (e.g., commercial buildings) to residential complexes may also be eligible for the PBRH rebate.

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How to apply

Applicants can apply for the rebate online through My Business Account or My Account.

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Conclusion

This incentive aims to reduce the financial burden of constructing new rental housing, thus fostering the creation of more long-term rental units.

For instance, a builder who constructed an eligible property in Ontario with a fair market value of $600,000 for each unit, now receives the full HST of $78,000 for each unit under the new PBRH rebate (previously only $24,000 under the NRRP rebate).

Even if you are ineligible for the new enhanced PBRH rebate, you may still be eligible to apply for the existing NRRP rebate.

For assistance with applying for this rebate or if you are in the process of constructing a property intended for residential leasing, Helen Ge CPA Team can provide tailored guidance to meet your needs.

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Reference

CANADA REVENUE AGENCY. (2024, July 04). GST/HST rebate for purpose-built rental housing (PBRH). Retrieved from GST/HST rebate for purpose-built rental housing (PBRH): https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/purpose-built-rental-housing.html