April 1, 2013 marks the return of PST to British Columbia, and it’s no April Fool’s joke. The much maligned HST was ousted by referendum.
The return of PST to BC on April 1, 2013 has some specific implications for buyers of new housing. This post will provide a brief overview of what changes can be expected.
Firstly, everyone needs to remember that HST consists of two parts: a 5% GST Federal portion and a 7% BC portion. Since the arrival of HST, the full 12% HST has applied to purchases of new housing.
To help alleviate the high cost of housing, a couple of rebate programs were introduced by the Federal and BC governments:
Generally speaking, for GST, the New Housing Rebate and New Residential Rental Property Rebate provide a rebate of 36% of the GST paid on an applicable purchase (please click on the above links for what qualifies as an applicable purchase), subject to price thresholds. For properties sold between $350,000.00 and $450,000.00, only a partial rebate is available with the rebate declining in value as the price approaches $450,000.00. Above $450,000.00, there is no rebate available on GST.
For the BC portion of HST, the New Housing Rebate and New Residential Rental Property Rebates provide a rebate of 71% of the PST paid on an applicable purchase with a maximum rebate of $42,500.00. That means that properties purchased for prices over $850,000.00 will only be eligible for a rebate of $42,500.00 which will be less than 71% of the PST paid on the purchase.
Before April 1, 2013
For applicable transactions closing before April 1, 2013, the above scheme of rebates continues to apply. What this means is that purchasers generally will have to pay 12% HST up front and then apply for rebates after their purchase. It can take several months for rebate applications to be processed and for the rebate to finally be received by a purchaser.
After April 1, 2013
For applicable transactions closing on or after April 1, 2013, the removal of the HST means that the provincial portion of HST will no longer apply. Instead, the sales tax applicable to the purchase of a new property on or after April 1, 2013 will consist of:
This means that the total amount of sales tax payable on a purchase at closing after April 1, 2013 is 7%. This translates into lower costs at closing.
With regard to the rebates from the Federal and BC governments, rebates on the 5% GST will remain available. Rebates on the provincial portion of HST will no longer be available however.
For the more visually inclined among us, please click on the link below for an infographic regarding the elimination of HST:
This post is obviously not an exhaustive explanation of the impact of the elimination of HST in BC so, if you have any questions, please feel free to contact our office at 604-939-8321.
– Stanley Leo, Associate