2023 changes relate to GST/HST

December 29, 2023
|In Taxation
|By Leo Lou

Below is a highlighted summary of some of the significant developments and rules in connection with the GST/HST.

Builders – enhanced GST rental rebate

  • Builders may be eligible to claim the enhanced GST rebate for purpose-built rental housing projects. This rebate will apply to projects that begin construction on or after September 14, 2023.  The Ontario government also announced on November 1, 2023 that it will introduce an enhanced rebate removing the full provincial portion of the Harmonized Sale Tax (HST) on qualifying new purpose-built rental housing, in line with the federal government’s enhanced GST New Residential Rental Property Rebate.

Proposed changes to the UHT rules

  • Certain residential property owners are required to file an Underused Housing Tax (UHT) annual return for each reportable residential property they own as of December 31, and may also have to pay the 1% UHT unless they qualify for certain ownership exemptions. On November 21, 2023, the government is proposing to make “specified Canadian corporations”, partners of “specified Canadian partnership” and trustees of “specified Canadian trusts”, “excluded owners” for UHT purposes.  “Specified Canadian corporations” means where less than 10% of the voting shares and equity value are owned by non-Canadian individuals or corporations.  These excluded owners would no longer have UHT reporting obligations.  Other proposed changes include:
    • Expanding the definitions “excluded owner”, “specified Canadian partnership” and “specified Canadian trust”
    • Reducing the minimum non-filing penalties from $5,000 for individuals ($10,000 for non-individuals) to $1,000 and $2,000 respectively
    • Introducing a new UHT exemption for residential properties held as a place of residence or lodging for employees.
    • Providing that unitized (condominiumized) apartment buildings are not “residential property” for UHT purposes.
    • Ensuring that an individual or a spousal unit can claim the UHT “vacation property” exemption for only one residential property for a calendar year (effective 2024 and subsequent calendar year).

Digital Platform Operators reporting, effective January 1, 2024

  • The reporting platform operator will have significant information collection, verification and reporting obligations under the new rules. Also, the platform operators will be required to report to CRA for the following information:
    • An individual: their first and last name, primary address, date of birth, taxpayer identification number (TIN), including jurisdiction of issuance.
    • An entity: its legal name, primary address, business registration number and TIN, including jurisdiction of issuance.
    • Financial indicators of the seller (whether in the name of the seller or otherwise).
    • The residency of the seller.
    • The total consideration paid or credited during each quarter, along with any fees, commissions or taxes that the Operators withheld or charged.
    • When the seller provides relevant services for the rental of immovable property, the Operators will be required to report additional information, which will include the address of each property listing and the number of days the property was rented.

Proposed to make payment card clearing services subject to GST

  • The 2023 federal budget proposes to amend the definition of “financial services” by excluding the payment card clearing services rendered by a payment card network operator (e.g. Visa or Mastercard) from the definition to ensure these services are subject to GST/HST.

Credit card surcharges

  • On March 27, 2023, CRA released GST/HST Info Sheet GI-200, which clarifies the GST/HST treatment of credit card surcharges. A credit card surcharge is generally a fee that is charged by the merchant to the customer for using their credit card to purchase goods and services at their establishment.  The Info Sheet states that a credit card surcharge “will generally be treated as consideration for a separate supply of a financial service where it is shown and charged separately from the consideration for the property or service purchased” and that the credit card surcharge will be considered a financial service that will not be subject to GST/HST.

 

This article is intended for general information purposes only and does not constitute professional advice.  Income tax law and regulation change frequently and the content on this article may no longer reflect the current state of the law. If you have any specific questions, you should consult a professional services advisor or email us for further advice.