Ontario removing rest of HST on new residential construction

Canada continues to struggle in the construction of new housing. Governments at all levels have initiated multiple efforts to facilitate and expedite housing starts. The Canadian Government's removal of the five per cent Goods and Services Tax (GST) and the parallel five per cent provincial component of the Harmonized Sales Tax (HST) on qualifying residential rental projects. Now the Ontario Government has announced it will remove the remaining eight per cent provincial component of the HST on qualifying new purpose-built rental housing in order to get more rental homes built across the province.

The province will rebate the provincial portion of the HST to match the federal government's removal of the GST portion, which was announced in September. Together, the provincial and federal actions will remove the full 13 per cent HST on qualifying new purpose-built rental housing in Ontario, which is intended to get more housing built.

To qualify, the housing must meet certain criteria:

• Must be new housing: Applies to new purpose-built rental housing only, such as apartment buildings, student housing and senior residences built specifically for long-term rental accommodation that meet the criteria.
• Building qualifications: New buildings must have at least four private apartment units or 10 private rooms or suites, and have at least 90 per cent of residential units designated for long-term rental.
• Timing: The enhanced rebate would apply to qualifying projects that begin construction between Sept. 14, 2023 and Dec. 31, 2030, and complete construction by Dec. 31, 2035.

The easing of the tax burden on new residential construction builds on the comprehensive measures in the Province's Housing Supply Action Plans, which aims to build at least 1.5 million homes by 2031. This strategy includes exploring the use of a Request for Qualification process that will transparently identify and pre-qualify companies that contribute to modular housing construction on the scale Ontario needs. The government is also working to leverage surplus provincial lands and partner with municipalities to leverage surplus municipal lands in order to help reduce the cost of building attainable homes, including modular homes.

Other provinces are taking similar measures. Newfoundland and Labrador, PEI and Nova Scotia have announced their intention to reduce the provincial portion of the HST in their provinces as well.

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