Recently a reader—we’ll call him Chuck—wrote in and asked how to calculate the new home GST rebate. He had purchased a new build home from the builder that included the HST. Chuck had no other upgrades and he wanted to know if he could just deduct the HST from the agreed upon price to calculate his rebate.
If only it were that simple.
First, Chuck is responsible for paying the builder the SPNR—the stated price net of rebates—at time of closing. This is the price Chuck agreed to pay to the builder: $457,000. But he can’t just deduct the HST from this price (since he bought the home in Ontario, he’s subject to HST). Instead, he had to calculate the “consideration” price. This is the price that does not include GST/HST or any rebates.
In Chuck’s case:
Consideration $ = (SPNR $ + $54,350) / 1.193
Consideration $ = ($457,000 + $54,350) / 1.193
Consideration $ = $428,625
That means Chuck’s actual cost, net GST/HST, is $428,625. He must also pay Ontario’s 13% HST which works out to an additional $55,721.
To calculate his GST/HST Federal rebate: $6,300 x ($457,000 – $$428,625) / $100,000 = $1,787.63
To calculate his Ontario new housing rebate: ($428,500 x 8%) x 75% = $25,680. But he can only claim up to $24,000.
So, to answer Chuck’s question: His SPNR is $457,000. But his consideration price is $428,625, so he’ll owe $55,721 in GST/HST. The good news is he’ll receive $25,787.63 in Ontario and Federal GST/HST rebates.
When calculating the rebates, keep in mind the calculations for the consideration price are different if your SPNR is less then $368,199 (Consideration = SPNR ÷ 1.052), more then $368,200 but less then $424,849 (Consideration = (SPNR + $28,350) ÷ 1.133), more then $424,850 but less than $484,499 (Consideration = (SPNR + $52,350) ÷ 1.193), or above $484,500 (Consideration = (SPNR + $24,000) ÷ 1.13).
For more information go to: the Canada Revenue Agency.