The HST rebate is offered to residents of Canada that recently purchased or renovated a home. It can help you get back a percentage of the tax that you paid when you purchased the home or paid for the renovations.
HST Rebate: Everything You Need To Know
The Harmonized Sales Tax Rebate is a way for home or real estate owners to recover some of the taxes they paid on a new or substantially renovated home that they will use for their personal use. In some cases, the rebate may be available to people who are not using the house as their residence. There are certain conditions that you must meet before you can receive this rebate.
The credit is paid quarterly for each tax year. Recipients should receive it on the fifth day of July, October, January, and April. The credit amount depends on the household income and number of dependents. Only one spouse in the household can claim the rebate.
Eligibility for the Rebate
Not everyone is eligible to receive the rebate. There are specific requirements that the homeowner must meet. The tax is only available for Canadian residents. The applicant must also meet one of these three criteria,
- Be at least 19 years old
- One or more dependents in the household
Meeting these requirements does not necessarily mean the applicant will receive the rebate. It depends on the household income. If your income is too high, you will receive notification in the mail that you did not qualify for the rebate. There are no penalties for applying if you do not qualify.
Is There A Time Limit For The Rebate?
Yes, there is a time limit for applying for the HST on a new home. You must file for the rebate within two years of closing on the house. If you fail to submit the rebate by then, you are no longer eligible to receive it for that property.
How Is The HST Rebate Calculated?
The HST rebate is calculated based on the price of the home and the income of the person filing for it. On a $350,000 home has a maximum rebate amount of $30,000. A sliding scale applies to homes priced between $350,000 and $450,000. Homes over $450,000 have a rebate limit of $24,000.
How to Apply Through Your Tax Return
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If you want to receive the HST rebate, you will need to file a tax return for the year prior to the payout period. There is no need to apply for the refund alone because the CRA will automatically determine eligibility based on each annual tax return.
Households that are eligible for the Canada Child Tax Benefit will automatically qualify for the rebate. Anyone who is separated from their spouse for 90 days or longer may also qualify to receive the rebate without affecting the eligibility of the household. In this case, the CRA must be notified of the filing status before the tax return is complete.
Reasons You May Receive a Rebate
There are many reasons you may qualify or apply for an HST rebate. There more to it than just buying or renovating a home. Other situations can also make you eligible for this rebate. Some of the reasons you may want to apply include,
Amounts Paid in Error
This reason applies if you paid or remitted the tax and shouldn’t have, or if you paid more taxes than you actually owed. It may also apply if you paid the tax as a penalty, interest, or any other similar obligation that was not owned or should not have been paid.
Legal Aid Plan
This reason applies if you are a person responsible for creating a legal aid plan or if you paid taxes on legal services or for someone else’s legal aid.
Lease of Land for a Residential Purpose
This reason applies if you have paid the HST tax on land that you own or lease and you lease that land to a person or who then leases it to a third party, where the third party cannot claim the same amount for their taxes paid on the same land.
This reason applies if you have received a remission order granted under the Financial Administration Act.
Rebate for Investment Plans
This reason applies if you have paid the HST tax with an investment plan or a segregated fund of an insurer or for a provincial stratified investment plan.
Keep in mind; you can only use one reason for each rebate application. You may be eligible to receive a rebate for more than one reason, but you will need to feel out an application for each one.
Situations Where You Cannot Claim a Refund
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Just like there are many reasons why you can claim a refund, there are many other reasons why you may not be eligible for one. Some of those situations include,
- You already received a rebate for the said amount
- You received a credit note, or you issued a debit note for a refund
- You are entitled to an input tax credit for the amount
- You filed bankruptcy
- The deadline for the application has passed.
Things to Watch Out For
When more than one person is involved in the purchase or building of a home, the rebate cannot be given to both parties. The home builder and the person who will live in the house should come to an agreement on the terms of the rebate, before you file for it. In one instance, a builder assumed that they would be entitled to the Harmonized Sales Tax Rebate since they were the ones who built the home, but it actually went to the person who bought the house and lived in it.
In order for a builder or buyer to qualify for the rebate, one needs to have documents that include provisions in case the government denies the application.
How to Fill Out the Application for the HST Rebate
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If you do not fill out the application form correctly, you will not receive the rebate. You may not be able to reapply for it if the deadline has passed. While the process may be a little intimidating, it is not difficult. If you are not comfortable filling out the application on your own, talk to a tax professional about it.
The Right Documents
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The first thing you need to do before filling out the application is to collect all the necessary documents. You can find many of them online and print them at home. You may need to obtain some of the documents you need from an attorney and the builder of the home. The records you need include,
- Form 524 – GST/HST New Residential Rental Property Rebate Application
- Form RC7524-ON – GST524 Ontario Rebate Schedule
- Statement of Adjustments (provided by your lawyer)
- Agreement of Purchase and Sale( provided by your builder)
- Lease (minimum of a year)
Filling Out the Form
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Filling out the form is the most challenging part of the process and also the most important. You must fill it out each section accurately. If you leave something off or add the wrong information, your rebate may be denied. Some people have trouble knowing where to find some of the information they need for the form.
You can find your Property information in your Statement of Adjustments, for the Relevant Date, you’ll want to input your date of final closing. In the sections where it asks for Type of claimant, choose Purchaser and landlord. The other fields are self-explanatory. Just select the right answer and sign the bottom. Once you have completed the application, send it in with the attached documents you used to fill it out. You can also ask your accountant or a tax professional to complete the form for you.
What If I Am Denied the Rebate Based On an Inaccurate Application
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If you did not fill out the application correctly or left off information and did not get the rebate, you might still be able to qualify for it. You will need to gather your documents and fill out the form again. This time, check with an accountant or attorney to make sure the form is accurate.
Some forms are not returned quickly, and it may be months before you realize you did not complete the application correctly. If you fail to resend the corrected application before the deadline, you may miss out on the rebate.
Is The HST Rebate Worth The Hassle?
The Harmonized Sales Tax Rebate process may seem lengthy and complicated, but it is worth the trouble. These rebates are often worth thousands of dollars. The money you receive can be used to pay on the home, complete more renovations, pay off other debts, or used any way you want. There are no rules that determine how the rebate should be used.
If you paid the HST tax on your home and are eligible to receive the rebate, you should complete the application and send it in. The refund was designed to help new homeowners get back some of the money they paid on their new home. You paid and HST on your home or renovation and as well as the usual sales tax. Why not get some of that money back?