Canada GST/HST Updates 2025: Key Guidelines for Home Construction

The Canadian Revenue Agency published updated guidelines for the home construction industry. The guidelines include changes from 2022 to 2025 regarding newly constructed or substantially renovated residential housing, filing GST/HST returns, and the cap on the rebate of purpose-built rental housing.

Although some of the changes have been in place for some time, the Canadian Revenue Agency only recently included them in its official guidelines for this sector.

Major Changes For the Home Construction Industry

As of May 2022, Canada implemented a rule requiring all assignment sales of newly constructed or substantially renovated resident housing to be subject to GST/HST. An assignment sale occurs when an original buyer who entered into a purchase agreement for a new home sells their rights and obligations under that agreement to someone else before the sale is completed and the property is registered in the original buyer's name. 

Before this rule was implemented, the GST/HST applied only in certain situations, such as when the original buyer was selling the property for profit or as part of a business.

Furthermore, the guidelines emphasize that from 2024, all registered taxable persons must submit their GST/HST returns electronically. The only ones exempt from this rule are listed financial institutions and most charities. Before the implementation of mandatory electronic filing for almost all businesses, a mandatory electronic filing threshold was in place, requiring only those who exceeded it to comply with that rule.

An additional significant change is that, from 2024, all payments or remittances over CAD 10,000 to the Receiver General for Canada, the federal government's central treasurer and accountant, must be made electronically. However, the option to pay by cheque remained in place despite this new requirement. Moreover, rather than immediately imposing penalties for non-compliance, the Canadian Revenue Agency focused on educating taxable persons about the available electronic payment options.

Finally, the Canadian government changed the GST/HST rebate, or payback, program for new residential rental properties. The previously established 36% rebate maximum has been increased to 100%. A key aspect of the new rebate program is abolishing the phase-out thresholds of the earlier rebate system. This means that qualifying rental housing projects can receive full rebates regardless of the property's value. However, some conditions must be met for properties to be eligible for a new residential rental property rebate program.

Conclusion

The introduction of mandatory electronic filing for GST/HST returns, the requirement for electronic payments over CAD 10,000, and the expanded rebate for purpose-built rental housing are all steps towards modernization and greater compliance within the home construction sector in Canada. 

In addition, some of these measures are specifically designed to stimulate the construction of rental buildings, address the overgrowing housing shortage issue, and encourage investments in long-term rental developments across Canada.

Source: RC4052 GST/HST Information for the Home Construction Industry