This blog’s information is regarding the application of the GST/HST to the sale of a house or residential condominium unit or condo unit by a builder who lives in the house or condo unit before selling it.
An individual is considered a builder if the individual:
- Builds or substantially renovates a house on land owned by the individual for the purpose of selling the house or renting it to someone else as a place of residence
- Hires someone else to build or substantially renovate a house on land owned for the purpose of selling the house or renting it to someone else as a place of residence
For GST/HST purposes, the individual / builder may be considered to have made a taxable self-supply of the house or condo unit if he/she moves into it or rent it to someone who is the first to occupy it as a place of residence.
A self-supply occurs at the later of the time the construction or substantial renovation of the house or condo unit is substantially complete and the time you give possession or use of the house or condo unit to a person under a lease, licence or similar arrangement. Under the self-supply rule, the individual is considered to have paid and collected the GST/HST calculated on the fair market value of the house or condo unit at the time of the self-supply and he/she is required to remit that amount.
If the individual / builder is a GST/HST registrant, he/she has to report the tax that was considered to have been collected on the self-supply in his/her GST/HST return for the reporting period during which the self-supply occurred.
If the individual / builder is not a GST/HST registrant, he/she should report the tax that was considered to have been collected on a self-supply on Form GST62 (Goods and Services Tax / Harmonized Sales Tax Return – non personalized. This must be filed by the end of the month following the month during which the self-supply occurred.
For more information, please refer to this detailed information sheet from the CRA -- http://www.cra-arc.gc.ca/E/pub/gi/gi-005/gi-005-e.pdf