To help you make an educated decision, let’s take a closer look at the income tax and GST/HST considerations that affect the finances of Canadian short-term hosts. For commercial tenancies (industrial, office or retail), HST will be charged on rents paid after July 1, 2010 (but most commercial tenants qualify to recover such HST payments through input tax credits). In some cases the rules are broader than one might think, whereas in other cases, the rules are more restrictive. Pre-Harmonized Sales Tax (HST) rules Before the implementation of the HST, Ontario Retail Sales Tax (RST) applied at a rate of 8 percent to premiums for certain types of insurance, including group insurance, contributions paid into funded plans as well as benefits paid out of unfunded plans. HST, like GST before it, can only be charged once on any item being sold. Although property taxes do not bear GST, your client must charge and collect GST on all property taxes paid by the tenant. My question is about HST on inter-company transactions. GST/HST and the reduction in rent under the Rent Reduction Agreement Commercial rent charged to tenants is generally taxable for GST/HST purposes, based on the value of consideration for the supply of the property; that is So far he has been expensing all his expenses/management costs in just one of the companies and he now wants to allocate them to the others. In part II, we will discuss property taxes, capital gains tax and business income tax. Therefore, HST must be paid on the initial home purchase, but not when they are resold … A property tax or millage rate [1] is an ad valorem tax on the value of a property. Administration of the GST/HST in Québec Under an agreement between the federal and Québec governments, Revenu Québec administers the GST/HST in Québec in accordance with the rules set by the federal government. When you are buying your first rental property, you may be faced with a question whether you have to pay HST upfront on a rental income property in Canada. Harmonized sales tax (“HST”) of 13% is imposed upon every taxable supply (i.e., sale) of property or services in Ontario, including commercial real estate. Neither is HST paid on municipal services when the municipality provides them. For specific questions about the HST and real estate feel free to contact our Office manager at 416-896-3333. In this case, you do not need to pay HST on fair market value of the property. In summer 2010, 75% of the Ontario portion of the HST, the new house HST rebate in Ontario reduces up The provincial portion of the HST is eight per cent and the federal Melinda Fleming & Teresa Gannon, "To AirBNB or not AirBnB? The relevant part of Schedule V to the Excise Tax Act is Part II, which relates to health care services. 13% HST consists of a 5% federal tax and 8% provincial tax is charged to new home buyers in Ontario upon their purchase. Similarly, it is also beneficial for the tenants to have HST-exempt supplies directly charged to them rather than having the landlord include costs of these supplies in the "operating costs". This is meant to relieve purchasers of cash-flow issues in situations where they can claim full input tax credits (for example, commercial property purchased for rental). The HST is a tax administered by the federal government which applies to certain goods and services in accordance with the provisions of the Excise Tax Act. With a few exceptions, HST works in the same way and with the same rules as the current GST. No, the 15% RST charged is not the Harmonized Sales Tax. No HST on property tax. If you have a questions about the Ontario HST or Tax Tips contact Revenue Canada direct at 1-800-337-7222. HST on Services Related to Tangible Personal Property The application of HST depends on whether or not the tangible personal property stays in the same province(s) while the service is performed. The term “farmland” is not specifically defined in the Excise Tax Act, though the CRA has provided guidance in GST/HST Memorandum 19.5 — Land and Associated Real Property: Meaning of “farmland” Some of these expenses (to us) include HST & some do … 4) HST … Although, when a municipality is providing certain other kinds of services they may have to charge GST/HST on them. does not For example, property tax, water supply and Below is a list of entities that are exempt from GST/HST on such purchases of property or services. As we head into vacation season, we often get questions related to GST/HST on cottage or vacation property rentals using services such as Airbnb. But, HST DOES apply to services such as moving cost, legal fees, home inspection fees, appraisal fees, labour for renovations, landscaping and REALTOR® commissions if applicable. Entrepreneur-Supporter Relationship: This relationship is the one that will be most familiar and will be illustrated using North Aware’s crowdfunding campaign to fund production of a winter jacket. It is often assumed that the Harmonized Sales Tax (HST), which in Ontario is currently 13% does not apply to the sale of a used residential property. The Ontario HST rate is 13%, made up of 5% for the federal portion and 8% for the Ontario portion. The harmonized sales tax replaces the provincial sales tax and the GST in some provinces. Similarly, the normal GST/HST rules should apply to the Entrepreneur’s ability to claim input tax credits (ITCs) on the GST/HST charged by the Platform. I have recently been hired to do the books for an owner who has several companies, all in entirely different businesses. The General Rule As … Generally, a GST/HST registrant is eligible to claim an input tax credit (ITC) for the GST/HST paid or payable on a property or service only to the extent that the registrant acquires the property or service in order to make a taxable In part I of Everything Tax When Purchasing or Selling a Property, we will discuss Land Transfer Tax, HST and Non-Resident Speculation Tax. How Long Do I Have To Sell An Inherited House? Consequently, it is not eligible as an input tax credit on the HST return. For commercial real estate, an exception 1 applies where a party making a taxable supply of commercial real property is not required to collect HST so long as the purchaser is an HST registrant. Sales Tax (HST, RST, Fuel) Harmonized Sales Tax (HST) On July 1, 2010, the Ontario Retail Sales Tax (RST) was replaced by the Harmonized Sales Tax (HST). R. Daren Baxter, “Real Property Transactions and HST”, CBA Nova Scotia Real Property Section Meeting (November 4, 2010). Sales taxes in Ontario where changed in 2010 then instead of GST and PST was introduced Harmonized sales tax (HST). If you claim input tax credit on the purchase of materials & land, self-supply rules kick in and you need to pay HST at closing on your own property. If your client has not been remitting GST on these amounts, the client is subject to assessment by the CRA for at least the past four years, and possibly more, plus interest and penalty. You do not collect the GST/HST on these supplies. For instance, if you provide automobile repair services in Ontario , the vehicles are staying in Ontario while you make the repairs, and subject to HST at a rate of 13%. On July 1st, 2010 HST (Harmonized Sales Tax) replaced existing 8% PST(provincial sales taxes) and 5% The Ontario HST The HST replaced the PST/GST in Ontario on July 1, 2010, to streamline the sales tax system. GST/HST of 0% is charged. Manitoba Government departments and entities are exempt from the federal Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on direct purchases. Exemptions (GST and HST is not charged on these items, but the providers cannot claim input tax credits) are set out in Schedule V to the Excise Tax Act. The provincial portion of the HST is 8 per cent and the federal portion is 5 per cent, for a combined HST rate of 13 per cent. Most expenses incurred for a client are charged back to them at cost, i.e. ^ Top of Page 12. The tax will be charged based on the difference in the value of the property from when you received it to when you sell it. It is collected by the Canada Revenue Agency (CRA) which then remits How to report Airbnb income Whenever you earn income from renting your home, you need to report the gross rental income and related expenses on your tax return. (1) CMHC premium of 2.75% for mortgage with a 5% down payment on a $ The HST is applied at 13% on most supplies of goods and services made in Ontario. You may be eligible to claim ITCs to recover the GST/HST paid or payable on property and services acquired to provide these supplies. There is no time limit on when you must sell an inherited house after inheriting property in Canada . Harmonized sales tax (HST) is a consumer tax that combines the Canadian federal goods and services tax (GST) and provincial sales tax (PST). Tax Considerations" (October 2018) harmonized sales tax (“HST”). HST tax resale homes in Ontario, tax on CMHC fees, a basic guide to HST tax Ontario real estate transactions, and how they affect you. some meals, parking & record searches. Canadian Provincial Sales Tax and GST/HST In the provinces of Ontario, Nova Scotia, New Brunswick, Prince Edward Island (PEI), Newfoundland and Labrador, you must charge HST because these provinces have combined the GST with their provincial sales tax (PST) to create a HST. In the OECD classification scheme, this includes households recurrent taxes on immovable property and net-wealth, taxes on estate, inheritance and gifts, and taxes on financial and capital transactions.