Builders and Electronic Filing Requirements

From: Canada Revenue Agency

GST/HST Info Sheet GI-099
April 2013

Note: This version replaces the one dated August 2010.

The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.

Electronic filing methods

There are four electronic filing methods. Some builders may have to use one method because of their particular circumstances. The methods for electronically filing a GST/HST return are as follows:

  • GST/HST NETFILE is an Internet-based filing service that allows registrants to file their GST/HST returns and eligible rebates directly with the CRA over the Internet. Registrants enter the required information on an on-line form and confirm that they want to file their return. Once the return has been electronically filed, registrants will immediately receive a confirmation number.
  • GST/HST TELEFILE allows eligible registrants to file their GST/HST returns using their touch-tone telephone and a toll-free number.
  • GST/HST Electronic Data Interchange (EDI) is a computer-to-computer exchange of information in a standard format. Eligible registrants can use EDI to file their GST/HST returns and remit their GST/HST payments electronically.
  • GST/HST Internet File Transfer (GIFT) allows eligible registrants to utilize third-party CRA-approved accounting software to file their returns electronically.

GST/HST NETFILE and GST/HST TELEFILE are free to use. EDI and GIFT are offered by a third party and may have associated costs.

When is a builder required to file electronically?

The following sections describe the situation where a builder must use GST/HST NETFILE and other situations where a builder has a choice between certain filing methods. The appendix to this info sheet provides a decision tree to illustrate these situations; however, you should refer to the descriptions of each situation in the sections below.

The following information applies for any reporting period that ends on or after July 1, 2010. However, situation 1 only applies to builders in PEI for reporting periods that end on or after April 1, 2013. Builders who are required to file electronically for reporting periods ending on or after these dates may be subject to penalties if they file paper returns or do not report information as required.

Situation 1: Builder must use GST/HST NETFILE

A builder must use GST/HST NETFILE to file its return for a reporting period where the builder:

  • is required to report the British Columbia (B.C.) transition tax (if an agent of the builder is required to report the B.C. transition tax, the agent must use GST/HST NETFILE to file its return for the reporting period); Footnote 1
  • is deducting the amount of any B.C. transition rebates it is entitled to claim (if an agent of the builder is deducting the amount of any B.C. transition rebates the builder is entitled to claim, the agent must use GST/HST NETFILE for the reporting period); Footnote 2
  • is required to recapture input tax credits (ITCs) for the provincial part of the HST paid or payable on certain taxable supplies acquired in Ontario, B.C. or P.E.I.;
  • during the reporting period, makes a taxable sale of a grandparented housing unit Footnote 3 in Ontario, B.C., Nova Scotia or P.E.I., where the purchaser is not entitled to claim a GST/HST new housing rebate or GST/HST new residential rental property rebate in respect of the GST or federal part of the HST payable on the grandparented sale;
  • is a first reseller Footnote 4 who, during the reporting period, made a taxable sale of a housing unit where the sale was subject to the HST at 13% in Ontario, 12% in B.C., 15% in Nova Scotia or 14% in P.E.I., and the first reseller purchased that housing unit on a grandparented basis;
  • is required to account for the transitional tax adjustment in its net tax calculation for the reporting period; or
  • is reporting a provincial transitional new housing rebate (either a rebate that the builder is entitled to claim or a rebate that is assigned to the builder by a purchaser who is entitled to claim the rebate) in its return for the reporting period.

Situation 2: Builder must use either GST/HST NETFILE or GST/HST TELEFILE

If situation 1 does not apply, a builder must use either GST/HST NETFILE or GST/HST TELEFILE to file its return for a reporting period where the builder:

  • has a threshold amount greater than $1.5 million;
  • pays or credits a GST/HST new housing rebate amount, including a provincial new housing rebate amount in respect of the provincial part of the HST where applicable, to a purchaser; and
  • claims the rebate amount as a deduction in calculating its net tax for the reporting period.

A builder's threshold amount for a GST/HST reporting period is the total revenue from the builder's taxable supplies of property and services made in Canada in the builder's previous fiscal year. The threshold amount includes revenue from zero-rated goods and services, and from taxable supplies of the builder's associates. When calculating the threshold amount, a builder would not include revenue from supplies made outside Canada, zero-rated exports of goods and services, zero-rated financial services, taxable sales of capital real property or goodwill.

Situation 3: Builder must use GST/HST NETFILE, GST/HST TELEFILE, EDI or GIFT

If situations 1 and 2 do not apply, a builder (other than a charity) must use one of the four electronic filing methods to file its return for a reporting period if the builder has a threshold amount greater than $1.5 million.

Situation 4: Builder may choose to file electronically or use a paper return

A builder may use GST/HST NETFILE, GST/HST TELEFILE, GIFT, EDI or a paper return to file its return for a reporting period if situations 1, 2 and 3 do not apply.

Although a builder is not required to file its returns electronically in this case, the CRA encourages all GST/HST registrants to file electronically. Electronic filing enables builders to receive refunds faster, speeds up processing times, reduces paperwork, alleviates the overall tax compliance burden and reduces potential errors.

Example 1

A builder that is not a charity has annual taxable supplies of $1,900,000. However, the builder and its associates exceed the $10 million threshold for recapturing ITCs and are therefore required to recapture ITCs.

Situation 1 applies and the builder is required to use GST/HST NETFILE for the reporting periods in which the builder has to recapture ITCs.

For reporting periods in which there is no requirement to recapture ITCs, no transitional housing information to report, and where a deduction is taken for a GST/HST new housing rebate amount, including a provincial new housing rebate amount in respect of the provincial part of the HST paid or credited to a purchaser, situation 2 applies and the builder is required to file its return using either GST/HST NETFILE or GST/HST TELEFILE.

For returns in which there are no ITCs to recapture or transitional housing information to report and where there is no deduction taken for a new housing rebate amount, situation 3 applies and the builder could use any of the four electronic filing methods. The builder must file its return electronically and cannot file a paper return.

Information schedule with builder's GST/HST NETFILE return

For reporting periods ending on or after July 1, 2010, or in the case of P.E.I., on or after April 1, 2013, builders to whom situation 1 applies are required to report the following information on their GST/HST NETFILE return:

  • the amount of the B.C. transition tax that became collectible in the reporting period;
  • if the builder (or builder's agent) is claiming the amount of any B.C. transition rebates the builder is entitled to claim on that return, the total amount of such rebates;
  • the number of grandparented housing units sold in Ontario, B.C., Nova Scotia or P.E.I. during the reporting period where the purchaser was not entitled to claim a GST/HST new housing rebate or a GST/HST new residential rental property rebate, and the total of the sale prices of those units (in the case of a grandparented sale of a condominium complex in Ontario, B.C. or P.E.I, the sale counts as one grandparented housing unit);
  • where the builder is a first reseller, the number of newly constructed or substantially renovated housing units sold during the reporting period that are subject to HST at 13% in Ontario, 12% in B.C., 15% in Nova Scotia or 14% in P.E.I., where those units were previously purchased by the first reseller on a grandparented basis, and the total of the purchase prices paid by the first reseller for those units;
  • the transitional tax adjustment that is required to be included in the builder's net tax calculation for the reporting period; and
  • the amount of all provincial transitional new housing rebates (including those assigned to the builder by a purchaser) that the builder is reporting in its GST/HST return.

This information is reported in separate information fields on Schedule A, Builders – Transitional Information on the GST/HST NETFILE return. However, if a builder does not have any provincial transitional new housing rebates that were assigned to the builder by purchasers and is only reporting provincial transitional new housing rebates that the builder is entitled to claim and no other transitional information as described above, the builder is not required to complete Schedule A and may report these rebates on line 111 of the GST/HST NETFILE return.

Information field for GST/HST new housing rebate amounts paid or credited by a builder

Currently, a builder is required to submit a purchaser's GST/HST new housing rebate application (Form GST190) when the builder pays or credits the rebate amount to the purchaser. In this case, the builder can claim the rebate amount as a deduction from its GST/HST liability in the return for the reporting period during which the amount was paid or credited to the purchaser. This requirement does not change. Builders continue to include this rebate amount on line 108, "Total ITCs and adjustments", on their GST/HST return.

However, in addition to including the rebate amount on line 108, builders whose threshold amounts are over $1.5 million (i.e., situation 2 applies) and builders who are required to use GST/HST NETFILE (i.e., situation 1 applies) are required to indicate in a separate information field, line 135, "GST/HST New Housing Rebates", the total amount of the GST/HST new housing rebates they have included on line 108, including any provincial new housing rebates in respect of the provincial part of the HST. These builders are required to file their return using GST/HST NETFILE or GST/HST TELEFILE, unless they meet situation 1 and are required to use GST/HST NETFILE. Builders who file their return using GST/HST TELEFILE must also submit the rebate applications separately, by mail, to the Summerside Tax Centre.

Builders who file their return using GST/HST NETFILE can choose to electronically file the new housing rebate applications with their return. Electronic filing is only available for rebate application types 1A and 1B. In this case, builders are not required to mail the rebate applications to CRA.

Line 135 has not been added to the paper return. This reporting requirement only applies to builders that file their returns using GST/HST NETFILE or GST/HST TELEFILE. The information on line 108, and not line 135, is used in the calculation of net tax.

Example 2

A builder pays or credits a GST/HST new housing rebate to a purchaser. The builder claims that amount as a deduction from the GST/HST owing in the return for the reporting period during which the amount is paid or credited to the purchaser. The amount of the rebate is included on line 108, "Total ITCs and adjustments", on the builder's return.

If situation 1 does not apply, and if the builder's threshold amount is over $1.5 million, situation 2 applies and the builder is required to file its return for the reporting period using GST/HST NETFILE or GST/HST TELEFILE.

If situation 1 applies, the builder is required to file its return for the reporting period using GST/HST NETFILE.

In both cases, the builder must indicate in a separate information field, line 135, "GST/HST New Housing Rebates", the total amount of the GST/HST new housing rebate included on line 108.

If using GST/HST NETFILE, the builder can choose to electronically file the GST/HST new housing rebate application (Form GST190 – Application types 1A and 1B) with the return. In this case, the builder is not required to mail the rebate application to the CRA.

If using GST/HST TELEFILE, the builder is required to submit the rebate application separately, by mail, to the Summerside Tax Centre.

Example 3

A builder's threshold amount does not exceed $1.5 million. The builder pays or credits a GST/HST new housing rebate to a purchaser. The builder claims that amount as a deduction from the GST/HST owing in the return for the reporting period during which the amount was paid or credited to the purchaser. The amount of the rebate is included on line 108, "Total ITCs and adjustments", on the builder's return.

If situation 1 does not apply, and as situations 2 and 3 do not apply, situation 4 applies and the builder is able to use any filing method, including filing a paper return.

If the builder chooses to file its return using GST/HST NETFILE or GST/HST TELEFILE, or if situation 1 applies, the builder must include the rebate amount on line 135, as well as on line 108.

Builders who pay or credit a provincial new housing rebate in respect of the provincial part of the HST must include this amount on line 135 with any GST/HST new housing rebate in respect of the federal part of the HST that the builder paid or credited to a purchaser. For information on provincial new housing rebates:

Builders in Nova Scotia cannot pay or credit the Nova Scotia new housing rebate in respect of the provincial part of the HST payable in Nova Scotia if:

  • the written agreement of purchase and sale was entered into after April 6, 2010, and
  • under the agreement both ownership and possession are transferred to the purchaser after June 2010.

For more information on the Nova Scotia new housing rebate, refer to GST/HST Notice 256, HST Rate Increase for Nova Scotia – Questions and Answers on Housing Rebates and Transitional Rules for Housing and Other Real Property Situated in Nova Scotia, and GST/HST Info Sheet GI-087, Harmonized Sales Tax: Stated Price Net of GST/HST New Housing Rebate in Nova Scotia.

Reporting recaptured ITCs

Builders that are required to recapture ITCs (i.e., situation 1 applies) are required to report the following on their GST/HST NETFILE returns:

  • the "gross" amount of ITCs and adjustments, i.e., all ITCs the builder is entitled to claim before taking into account any recaptured ITCs;
  • the amount of the ITCs for the provincial part of the HST that is subject to recapture. This amount is automatically multiplied by the applicable recapture rate for the period. The builder is generally required to report these recaptured ITCs in the reporting period in which the HST became payable; and
  • the net amount of ITCs (automatically calculated by deducting recaptured ITCs from gross ITCs) eligible to be claimed in the GST/HST NETFILE return.

This information must be reported in separate information fields on Schedule B, Calculation of Input Tax Credits on the GST/HST NETFILE return. Generally, if a registrant fails to report recaptured ITCs in the proper reporting period, this is to be corrected by sending the amended information in writing to their tax centre.

Schedules, forms and rebate applications

The schedules that capture the information relating to recaptured ITCs and HST transitional housing information are not available in paper form and must be filed using GST/HST NETFILE.

Other GST/HST documents, such as Form GST60, GST/HST Return for Acquisition of Real Property, cannot be filed electronically and must continue to be filed by mail. All rebate applications for rebate amounts that are included in the determination of a registrant's amount owing in a return filed electronically must be sent by mail, with the exceptions shown below, to the Summerside Tax Centre no later than the day the registrant files its return.

Builders who file their return using GST/HST NETFILE can electronically file GST/HST new housing rebate application types 1A and 1B (Form GST190) with their return.

GST/HST registrants who file their return using GST/HST NETFILE can electronically file the following rebate applications with their return:

GST/HST payments

GST/HST registrants are not required to make payments electronically. However, the CRA encourages all registrants to make payments using its on-line service "My Payment" at www.cra.gc.ca/mypayment.

GST/HST registrants may also pay electronically through their financial institution's telephone banking, Internet banking or automated bank machines. More information is provided at www.cra.gc.ca/electronicpayments.

This info sheet does not replace the law found in the Excise Tax Act (the Act) and its regulations. It is provided for your reference. As it may not completely address your particular operation, you may wish to refer to the Act or appropriate regulation, or contact any CRA GST/HST rulings office for additional information. A ruling should be requested for certainty in respect of any particular GST/HST matter. Pamphlet RC4405, GST/HST Rulings – Experts in GST/HST Legislation explains how to obtain a ruling and lists the GST/HST rulings offices. If you wish to make a technical enquiry on the GST/HST by telephone, please call 1-800-959-8287.

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%. If you are uncertain as to whether a supply is made in a participating province, you may refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

If you are located in Quebec and wish to make a technical enquiry or request a ruling related to the GST/HST, please contact Revenu Québec at 1-800-567-4692. You may also visit the Revenu Québec Web site to obtain general information.

All technical publications related to GST/HST are available on the CRA Web site at www.cra.gc.ca/gsthsttech.

Appendix: Builder's electronic filing decision tree

The following chart shows which electronic filing method a builder must use.

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