What is self-supply in context with GST/HST New Residential Rental Property Rebate?

When it comes to taxation, every word matters. Take self-supply for example. It might mean that demand and supply originate from the same source. But it’s not that simple when it stands to pertain to builders. It might seem like a simple, easy to follow concept but there are certain rules that connect this term to GST/HST New Residential Rental Property (NRRP) Rebate eligibility.

Personal and corporate income tax experts at ZRPC, Scarborough, thus explain the criteria that defines self-supply and how it relates to GST/HST NRRP rebate.

What Self Supply means here?

In the context of a builder, self-supply means when a builder constructs a residential complex, multiple unit or not, or builds an addition to a multiple unit residential complex, both intended to be leased or rented, it means that builder has made a self-supply of that construction. If you’re that builder, you’re eligible to claim GST/HST NRRP rebate.

When a builder makes a taxable sale of real property and buys it immediately, he/she is fulfilling the criteria of self-supply. A builder of a newly constructed or substantially renovated residential complex, an addition to a multiple unit residential complex, a residential complex carved out of a non-residential unit, then you’ve made a self-supply if:

• ·         You lease that constructed/renovated/converted property to an individual for long term residential use and that person is the first occupant.

• ·         You are the first occupant of that residential complex/addition to a multiple residential complex, for residential purposes.

• ·         You consider exempt sale of the building part of complex and exempt long term lease of the land part of complex under a single agreement.

• ·         You lease the land to a person who attaches a residential unit, like a site on lease in a residential trailer park. 

A builder who is considered to have made a self-supply by satisfying the above mentioned criteria, is also considered to have paid and collected GST/HST, calculated on the current and fair market value of the property from the date of the self-supply. If you’re that builder, you’re required to show the GST/HST transaction while filing your GST/HST return. It doesn’t matter if you’re registered for GST/HST or not. The NRRP rebate amount will solely depend on the GST/HST amount you’re supposed to have paid on the self-supply.

• You’ve made a self-supply and are eligible for GST/HST NRRP rebate on the following dates:

• ·         The day of the completion of construction or substantial renovation.

·         The very day you occupy the said property for residential purpose or you give possession or use of the complex/unit in the complex/addition, under a lease to a lessee or under some sort of license of occupancy for residential purpose (it’s advisable to determine the fair market value of property at the very moment of occupancy as It helps to clearly define the time of occurrence of self-supply).

Residential rental property rebate is a tricky matter to deal with. The fact that the criteria vary from province to province makes it more perplexing. To solve your property related tax matters, consult the personal and corporation income tax consultants at ZRPC, Scarborough.