Legislative and Regulatory Proposals Relating to the Excise Tax Act

Excise Tax Act

• 1 (1) Subsection 191(9) of the Excise Tax Act is replaced by the following:

  • Marginal note:Substantial completion

    (9) For the purposes of this section, subsection 256.2(3.1) and the Real Property (GST/HST) Regulations, the construction or substantial renovation of a multiple unit residential complex or a condominium complex, or the construction of an addition to a multiple unit residential complex, shall be deemed to be substantially completed not later than the day all or substantially all of the residential units in the complex or addition are occupied after the construction or substantial renovation is begun.

• (2) Subsection (1) is deemed to have come into force on September 14, 2023.

• 2 (1) Section 256.2 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Purpose-built rental housing — student residence

    (2.01) For the purposes of applying this section and the Real Property (GST/HST) Regulations (other than prescribed provisions) in respect of a taxable supply of property that is a residential complex or an addition to a residential complex, if the taxable supply and the property meet the conditions described in paragraph (3.1)(a) or (b), clause (a)(iii)(A) of the definition qualifying residential unit in subsection (1) is to be read as follows:

    • (A) as the primary place of residence of the person or a relation of the person, or of a lessor of the complex or a relation of that lessor, for a period of at least one year or for a shorter period where the next use of the unit after that shorter period is as described in clause (B),

    • (A.1) if the person is a university that is established and operated otherwise than for profit, a public college that is established and operated otherwise than for profit or a school authority that is established and operated otherwise than for profit, as a place of residence for students attending the university, the public college or a school of the school authority, or

• (2) The portion of subsection 256.2(3) of the Act after paragraph (d) and before the first formula in that subsection is replaced by the following:

  the Minister shall, subject to subsections (3.1) to (3.4), (7) and (8), pay a rebate to the person equal to the total of all amounts each of which is an amount, in respect of a residential unit that forms part of the residential complex or addition, as the case may be, and is a qualifying residential unit of the person at the particular time, determined by the formula

• (3) The description of B in subsection 256.2(3.2) of the Act is replaced by the following:

  B

  is the unit's percentage of total floor space.

• (4) Section 256.2 of the Act is amended by adding the following after subsection (3.2):

  • Marginal note:Purpose-built rental housing — student residence

    (3.3) The rules set out in subsection (3.4) apply in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex if the following conditions are met:

    • (a) the builder of the residential complex or addition is a university, a public college or a school authority;

    • (b) the construction or substantial renovation of the residential complex or addition is carried out primarily for the purpose of providing a place of residence for students attending the university, the public college or a school of the school authority;

    • (c) the builder would, in the absence of subsection 191(6), be deemed under section 191 to have made and received, at a particular time, a taxable supply by way of sale of the residential complex or addition; and

    • (d) in respect of the taxable supply referred to in paragraph (c) that would, in the absence of subsection 191(6), be deemed under section 191 to have been made and received by the builder, it is the case that

      • (i) the residential complex or addition is property prescribed for the purposes of subsection (3.1), determined as if the deemed purchase referred to in subparagraph (3)(a)(ii) were the taxable supply and the particular time referred to in paragraph (3)(b) were the particular time referred to in paragraph (c), and

      • (ii) the taxable supply and the residential complex or addition meet the conditions prescribed for the purposes of subsection (3.1) and the conditions described in paragraph (3.1)(a) or (b).

  • Marginal note:Amount of rebate — student residence

    (3.4) If the conditions set out in subsection (3.3) are met in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex, for the purposes of applying subsection (3) in respect of the construction or substantial renovation of the residential complex or addition, the following rules apply:

    • (a) the conditions in subparagraph (3)(a)(ii) and paragraphs (3)(b) to (d) are deemed to be met at the particular time referred to in paragraph (3.3)(c);

    • (b) the deemed purchase referred to in subparagraph (3)(a)(ii) is deemed to be the taxable supply referred to in paragraph (3.3)(c) that would, in the absence of subsection 191(6), be deemed under section 191 to have been made and received by the builder of the residential complex or addition;

    • (c) the particular time referred to in paragraph (3)(b) is deemed to be the particular time referred to in paragraph (3.3)(c); and

    • (d) despite subsections (3.1) and (3.2), the amount of the rebate under subsection (3) in respect of the construction or substantial renovation of the residential complex or addition is equal to the amount determined as if the first formula in subsection (3) and the descriptions for that formula were read as follows:

      A × B

      where

      A

      is the amount that, in the absence of subsection 191(6), the person would have been entitled to claim under subsection 193(2) in respect of the deemed purchase of the residential complex or addition determined as if the reference in paragraph 193(2)(a) to "basic tax content" were read as a reference to "qualifying portion of basic tax content (as defined in subsection 256.2(1))", and

      B

      is the unit's percentage of total floor space.

• (5) Subsections (1) to (4) are deemed to have come into force on September 14, 2023.

Real Property (GST/HST) Regulations

• 3 (1) Paragraph 5(1)(a) of the Real Property (GST/HST) Regulations is replaced by the following:

  • (a) subsection (1.1) and section 47 of the New Harmonized Value-added Tax System Regulations, No. 2 do not apply in respect of the residential complex, interest or addition, as the case may be; and

• (2) Section 5 of the Regulations is amended by adding the following after subsection (1):

  • Marginal note:Rebate for student residence — provincial component

    (1.1) Subject to subsections (6) and (7), if a person that is a builder of a residential complex or an addition to a multiple unit residential complex is entitled to claim a rebate under subsection 256.2(3) of the Act in respect of the construction or substantial renovation of the residential complex or addition, as the case may be, if the residential complex or addition is situated in Ontario, Nova Scotia, Prince Edward Island or Newfoundland and Labrador and if the conditions set out in subsection 256.2(3.3) of the Act are met in respect of the construction or substantial renovation of the residential complex or addition, then, for the purposes of subsection 256.21(1) of the Act, the following rules apply:

    • (a) subsection (1) and section 47 of the New Harmonized Value-added Tax System Regulations, No. 2 do not apply in respect of the residential complex or addition; and

    • (b) the person is a prescribed person and the amount of the rebate under subsection 256.21(1) of the Act in respect of the residential complex or addition is equal to the total of all amounts each of which is an amount, in respect of each residential unit that forms part of the residential complex or addition and that is a qualifying residential unit of the person at the particular time referred to in paragraph 256.2(3.3)(c) of the Act in respect of the construction or substantial renovation of the residential complex or addition, equal to

      • (i) if the residential complex or addition is situated in Ontario, Nova Scotia or Newfoundland and Labrador, the amount determined by the formula

        (A − B) × C

        where

        A

        is the amount that the person would have been entitled to claim under subsection 193(2) of the Act in respect of the taxable supply by way of sale of the residential complex or addition that would, in the absence of subsection 191(6) of the Act, have been deemed under section 191 of the Act to have made and received by the person in respect of the construction or substantial renovation of the residential complex or addition,

        B

        is the amount that the person would have been entitled to claim under subsection 193(2) of the Act in respect of the taxable supply by way of sale of the residential complex or addition that would, in the absence of subsection 191(6) of the Act, have been deemed under section 191 of the Act to have made and received by the person in respect of the construction or substantial renovation of the residential complex or addition determined as if the reference in paragraph 193(2)(a) of the Act to "basic tax content" were read as a reference to "qualifying portion of basic tax content (as defined in subsection 256.2(1))", and

        C

        is the unit's percentage of total floor space, and

      • (ii) if the residential complex or addition is situated in Prince Edward Island, the amount determined by the formula:

        (A − B) × C × D

        where

        A

        is the amount that the person would have been entitled to claim under subsection 193(2) of the Act in respect of the taxable supply by way of sale of the residential complex or addition that would, in the absence of subsection 191(6) of the Act, have been deemed under section 191 of the Act to have made and received by the person in respect of the construction or substantial renovation of the residential complex or addition,

        B

        is the amount that the person would have been entitled to claim under subsection 193(2) of the Act in respect of the taxable supply by way of sale of the residential complex or addition that would, in the absence of subsection 191(6) of the Act, have been deemed under section 191 of the Act to have made and received by the person in respect of the construction or substantial renovation of the residential complex or addition determined as if the reference in paragraph 193(2)(a) of the Act to "basic tax content" were read as a reference to "qualifying portion of basic tax content (as defined in subsection 256.2(1))",

        C

        is the lesser of the unit's percentage of total floor space and the quotient, expressed as a percentage, determined by dividing $350,000 by the fair market value of the residential complex or addition, and

        D

        is

        • (i) if the construction or substantial renovation of the residential complex or addition is substantially completed before 2029, 100%,

        • (ii) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2029, 90%,

        • (iii) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2030, 80%,

        • (iv) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2031, 70%,

        • (v) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2032, 60%,

        • (vi) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2033, 50%,

        • (vii) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2034, 40%, and

        • (viii) if the construction or substantial renovation of the residential complex or addition is substantially completed in 2035, 30%.

• (3) Subsections (1) and (2) are deemed to have come into force on September 14, 2023.