100% GST Rebate for Purpose-Built Rentals

Summary#

The final Real Property (GST/HST) Regulations set the detailed rules for a temporary 100% federal rebate of the GST (or the federal part of HST) on new purpose‑built rental housing. They also put in place matching provincial HST rebates for projects in Ontario, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. The regulations are treated as having come into force on September 14, 2023.

What it does#

• Defines what counts as “purpose‑built rental housing.” A building or an addition can qualify if it is a multiple‑unit residential complex that either:
  • has at least 4 units with private kitchen, bath and living area, or
  • has 10 or more units.
• Requires that “all or substantially all” units be qualifying residential units held for specified rental purposes.
• Excludes some substantial renovations from qualifying when the building was already used as residential immediately before renovation. This is aimed at preventing some “renoviction” style conversions from getting the rebate.
• Sets time limits for eligibility:
  • construction must begin after September 13, 2023 and before 2031, and
  • construction must be substantially completed before 2036.
• Implements matching provincial rebates for the provincial component of HST in:
  • Ontario, Nova Scotia, Newfoundland and Labrador (generally matching the federal 100% rebate), and
  • Prince Edward Island (rebate capped per unit at the lesser of 100% of provincial HST attributable to the unit and $35,000 if substantially completed before 2029, with the rebate rate and cap reduced by 10% per year from 2029 through 2035, reaching a maximum of $10,500 in 2035).
• Keeps in place the existing federal New Residential Rental Property Rebate (the legacy rebate equal to 36% of the GST/HST to a maximum of $6,300 per unit) for some projects in Newfoundland and Labrador that do not qualify for the enhanced provincial rebate.
• Sets the administrative details:
  • Rebate applications must be filed within two years after the end of the month in which tax first becomes payable.
  • The Canada Revenue Agency will administer the rebates.

Who's affected#

• Property developers and builders of multi‑unit rental projects.
• Purchaser‑landlords and builder‑landlords who pay GST/HST on new purpose‑built rental housing.
• Tenants and renters indirectly, if savings in construction costs affect rents.
• The provincial governments of Ontario, Nova Scotia, Prince Edward Island and Newfoundland and Labrador, because they chose to offer provincial rebates administered federally.
• Other groups (universities, long‑term care projects, duplex/triplex owners) asked for broader coverage during consultation, but the regulations do not expand eligibility to those specific cases.

Why it matters#

• The rule lowers the upfront tax cost of building qualifying rental buildings. That can make more rental projects financially viable.
• For developers and landlords it can reduce construction or acquisition costs immediately. For renters it could help increase the supply of purpose‑built rental units over time, which may help affordability if savings are passed on.
• The provincial differences matter for project planning. In Prince Edward Island the rebate per unit is capped and phases down between 2029 and 2035, which can change the economics of projects depending on their completion year.
• The regulations are retroactive to September 14, 2023, so projects that began after September 13, 2023 may be eligible even if they started before the regulations were published.