Sutton Group - West Coast Realty

Summary of HST Issues

To date, government has not responded to industry’s recommendations to mitigate the effects the harmonized sales tax (HST) on new housing and renovations. 

Federal and provincial officials are attempting to apply the HST rules that were made for Ontario, to BC. Industry has made it blatantly obvious that BC’s situation is very different, with higher average house prices, land and construction costs; lower embedded PST rates; delayed building times due to the Olympics; and higher government-imposed costs on new housing, including but not limited to, the green building code, amenity fees, secondary suite requirements, and a higher property transfer tax rate. Also, the Ontario industry had forewarning that HST was in the works and had several months to consult with government, whereas BC did not.

The Greater Vancouver Home Builders’ Association (GVHBA), Canadian Home Builders Association of BC (CHBA BC), and Urban Development Institute (UDI), are all communicating their concerns to government in a concerted effort. The following is a summary of what the residential construction industry has asked government to consider:

Transition Rules

Government finance officials maintain they are still working to define the transition rules, and advised we can expect an announcement in “the coming months”.  The Ontario rules are convoluted (an executive summary of Ontario’s rules is available here). It is impossible for builders and developers to truly anticipate how HST will apply to new homebuyers until the rules are officially announced.

Industry Recommendation:

­                     That all contracts signed prior to July 1, 2010 be grandparented; and/or

­                     That all projects under construction prior to July 1, 2010 be grandparented.

­                     Extend July 1, 2010 date to December 31, 2010.

Thresholds & Rebates

Given the average higher housing costs in the Greater Vancouver, Greater Victoria, and Kelowna regions, all members of industry are advocating for higher thresholds and rebates.

Industry Recommendations:

­                     Increase the threshold from $400,000 to $600,000.

­                     Increase the rebate from $20,000 to $30,000.

­                     Ensure the threshold and rebate is indexed every two years.

­                     Eliminate the property transfer tax on new housing (UDI).

Renovations

Untaxed until now, the labour component of renovation projects will be subject to HST. Studies have proven this creates disincentives for consumers to pursue work from legitimate contractors who file taxes, in turn stimulating growth in the underground economy.

Industry Recommendations:

­                     Implement a rebate formula for the provincial portion of the HST.

­                     Industry’s proposed rebate must go directly to the consumer, encouraging them to create a clear record of work performed.

­                     Extend HST rebate or credit to energy-efficient products.

We have heard no official response from Premier Gordon Campbell or Finance Minister Colin Hansen regarding our recommendations. As soon as government informs us of its intentions, you can be assured we will let you know immediately. Meanwhile, we will continue to petition government for fair treatment of new housing and renovations, and we encourage members to contact government officials (including your local MLA) to explain how your consumers and business will be affected.

Amy Spencer-Chubey, BA l Director of Government Relations
Greater Vancouver Home Builders’ Association