New online resources to help members understand the New Housing Transition Tax and Rebate Act and Regulations
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On December 1, 2012, the New Housing Transition Tax and Rebate Act and Regulations came into force. To help you, BCREA has updated its online HST/PST resources, including the “HST to PST: Transition Rules for Real Property” available at www.bcrea.bc.ca.
The most important revision in the frequently asked questions (FAQ) is to the question:
Q. “How will the transition affect the way I prepare or counter a standard form Contract of Purchase and Sale?”
A. The New Housing Transition Tax and Rebate Act and Regulations require somewhat different disclosures, depending on whether or not the seller is a “foreign supplier” (basically, whether they’re a resident of Canada). Four new addendums to the Contract of Purchase and Sale are available on WEBForms® as of December 1, together with an education piece to help guide REALTORS®.
The following new FAQs have also been added:
Q. If a Contract of Purchase and Sale for a new home was signed on or after February 17, 2012 and before December 1, 2012, and included an addendum containing required information, is any further action needed?
A. Yes. Where the CPS was signed on or after February 17, 2012 and before December 1, 2012, and neither ownership nor possession transfer on or before December 31, 2012, then a new addendum (now available on WEBForms®) must be provided to the buyer by January 2, 2013. While the addendum must be signed by the seller, it doesn’t have to be signed by the buyer.
If a sale is subject to transition tax (that is, tax becomes payable after March 31, 2013 and before April 1, 2015, and substantial renovation or construction is at least 10% complete before April 1, 2013), the seller must ensure that the statement of adjustments (or other document issued at the time tax is payable) contains the information in the addendum, plus disclose the completion percentage as at immediately before April 1, 2013, and as at the date tax is payable.
Q. What methods can be used to provide the buyer with the addendum?
A. Four acceptable delivery methods include:
in person;
courier or registered mail;
fax; or
any other means, including email, if written confirmation of receipt by the buyer or the buyer’s agent is obtained.
Q. Is there a penalty for builders who don’t make the required disclosures during the transition period?
A. Yes. A penalty of up to $10,000 per home (or one per cent of the purchase price) can be imposed on a builder who fails to fully and accurately disclose the required information. In the case of a builder who knowingly makes a false statement, a penalty of up to four per cent of the purchase price may be imposed, to a maximum of $40,000 per home.
HST/PST Calculator for BC: www.bcrea.bc.ca/government-relations/hst-calculator. The calculator has been revised to address the tax situation before the PST is reinstated and after. BCREA’s HST/PST resources are intended as a general overview, not a definitive resource.
If you have suggestions for additional content, contact Harriet Permut at [email protected].
BCREA plans to continue to enhance its online HST/PST website at: http://www.bcrea.bc.ca/ government-relations/pst-transition-rules and welcomes members’ feedback.