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Overview of the Enhanced GST Rental Rebate for New Rental Apartments


In a significant development on September 14, 2023, the Department of Finance revealed further details about the federal government’s initiative to enhance the GST rental rebate. This change is set to provide substantial financial relief to builders in the residential rental sector, particularly for newly constructed multi-unit rental properties.

Key Changes and Dates

The enhanced rebate exempts builders from the federal part of GST/HST on new multi-unit rental properties. To be eligible, construction must start after September 13, 2023, and complete by December 31, 2035, with a construction commencement window extending until January 1, 2031. Additionally, similar measures are anticipated from the Ontario government for the provincial component of GST/HST.

Understanding the Existing vs. Enhanced Rebate
Existing GST Rental Rebate

Under the previous system, builders faced significant GST/HST costs in constructing rental properties. Rebates were limited to 36% of the federal GST/HST (max $6,300 per unit) and 75% of the provincial component in Ontario (max $24,000 per unit), with phase-outs for higher-valued units.

Enhanced GST Rental Rebate

The enhanced rebate aims for 100% recovery of the federal GST/HST for qualifying units. This change is especially beneficial for units valued over $450,000, translating into a 5% savings.

Eligibility Criteria

For the enhanced rebate, builders must ensure:

  • Construction starts post-September 13, 2023, and before 2031.
  • Completion by end-2035.
  • At least four private apartment units or 10 private rooms/suites.
  • 90% of units designated for long-term rental.
  • The project isn’t already under construction.
Potential Concerns

One concern is that projects already underway may miss out on these benefits, possibly leading builders to alter or halt projects.

Conclusion and Action Steps

Builders should assess if their current or planned projects qualify for the enhanced rebate and seek guidance on claiming eligible GST/HST rebates. Determining the fair market value of each unit remains crucial, and professional tax advice, can be invaluable in navigating these processes.