Posted Apr 15, 2009, 2:44 PM
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Registered User
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Join Date: Oct 2006
Posts: 3,660
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Quote:
Originally Posted by d_jeffrey
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Yes I had read that before but the key factor seems to be the contract does not use the pre GST price but the NET GST. The example from the CRA site below if the contract is $342,672 Net GST the price would have been $330,000 but the builder is now charging $332,112 so the net price still equals $342,672. The $330,000 price never appeared in the original contract so the builder has essentially pocketed the 1% GST cut.
I was under the impression the builder could not do this so was wondering what others had found in order to give her advice. I assume she already asked her lawyer but I find many real estate lawyers are somewhat cluelesss on these kind of details.
Example 1
Mr. and Mrs. Green buy a new house from a builder for $342,672 (purchase price is $330,000, GST is $19,800 and the GST/HST new housing rebate is $7,128). The parties entered into the agreement of purchase and sale on August 30, 2007. Both ownership and possession transfer to Mr. and Mrs. Green on February 1, 2008. Since the house is purchased for use as their primary place of residence, the purchasers will be eligible to claim a GST/HST new housing rebate of $7,128 [Footnote 2] provided all of the other conditions for claiming the new housing rebate are met. The purchasers and builder agree to have the builder credit the amount of the GST/HST new housing rebate to the purchasers.
Since the agreement of purchase and sale was entered into after May 2, 2006, and before October 31, 2007, and both ownership and possession are transferred after June 30, 2006, GST on the purchase applies at the rate of 6%.
Since both ownership and possession are in fact transferred after December 31, 2007, the purchasers are entitled to claim a 2008 GST/HST transitional rebate. The amount of the transitional rebate will be adjusted to take into account the GST/HST new housing rebate of $7,128, which was credited by the builder. In this case, the transitional rebate is calculated using the following formula:
A × {0.01 – [(B ÷ A) ÷ 6]}
where
A = Purchase price paid for the house ($330,000)
B = Amount of the GST/HST new housing rebate ($7,128)
The 2008 GST/HST transitional rebate available to Mr. and Mrs. Green is equal to $2,112, as follows:
$330,000 × {0.01 – [($7,128 ÷ $330,000) ÷ 6]}
= $330,000 × {0.01 – [0.0216 ÷ 6]}
= $330,000 × {0.01 – 0.0036}
= $2,112
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