Questions and Answers on Simplified Reporting of Specified Housing Supplies

GST/HST Notices - Notice 294
May 2016

General

1. What is a specified housing supply?

The definition of "specified housing supply" is set out in section 1 of the Electronic Filing and Provision of Information (GST/HST) Regulations. The original definition of "specified housing supply" refers to a sale of grandparented housing where the purchaser is not entitled to claim a GST/HST new housing rebate or a GST/HST new residential rental property rebate in respect of the GST or federal part of the HST payable on the sale, regardless of the reason for the purchaser’s ineligibility (for example, the purchaser did not intend to use the housing as a primary place of residence for himself or herself or a relation; ownership of the housing was transferred to someone other than the purchaser; or the consideration for the housing was $450,000 or more).

However, under the proposed changes, the definition of "specified housing supply" would refer to a sale of grandparented housing to a person where the total of all amounts, each of which is the consideration payable for the sale or for any other taxable supply made to the person of an interest in the grandparented housing (that is, the total consideration) is $450,000 or more. Therefore, it would be easier for a builder to identify a sale of grandparented housing that would qualify as a specified housing supply and make it simpler for the builder to report the transitional information in respect of such supplies to the CRA.

2. What is grandparented housing?

For purposes of the definition of "specified housing supply", grandparented housing refers to newly constructed or substantially renovated housing located in:

• Ontario, where a written agreement of purchase and sale for the housing (detached house, semi-detached house, attached house, residential condominium unit or condominium complex) was entered into on or before June 18, 2009, and both ownership and possession of the housing transfer to the purchaser, under the agreement, after June 2010 (that is, the sale of the housing was not subject to the provincial part of the HST);
• Nova Scotia, where a written agreement of purchase and sale for the housing (detached house, semi-detached house, duplex, mobile home, floating home or residential condominium unit) was entered into on or before April 6, 2010, and both ownership and possession of the housing transfer to the purchaser, under the agreement, after June 2010 (that is, the sale of the housing remained subject to the provincial part of the HST at the rate of 8% after June 2010, instead of new rate of 10%);
• British Columbia, where a written agreement of purchase and sale for the housing (detached house, semi-detached house, attached house, residential condominium unit or condominium complex) was entered into on or before November 18, 2009, and both ownership and possession of the housing transfer to the purchaser, under the agreement, after June 2010 and before April 2013 (that is, the sale of the housing was not subject to the provincial part of the HST after June 2010 and before April 2013); and
• Prince Edward Island, where a written agreement of purchase and sale for the housing (detached house, semi-detached house, attached house, residential condominium unit or condominium complex) was entered into on or before November 8, 2012, and both ownership and possession of the housing transfer to the purchaser, under the agreement, after March 2013 (that is, the sale of the housing was not subject to the provincial part of the HST).

3. I am a builder of new housing and I do not pay or credit the GST/HST new housing rebate to purchasers; I let them file their rebate applications directly with the CRA. Do I need to be concerned with the proposed new definition of "specified housing supply"?

Yes. Under the original definition of "specified housing supply" you had to report the transitional information in respect of such supplies where the purchaser was not entitled (regardless of the reason for the purchaser’s ineligibility) to claim a GST/HST new housing rebate or GST/HST new residential rental property rebate for their purchase of grandparented housing.

Under the proposed changes, you would still have to report the transitional information in respect of specified housing supplies, but the reporting would be done based on the proposed new definition of "specified housing supply" (that is, a sale of grandparented housing where the total consideration is $450,000 or more). There is also a proposed election that would allow you to use the proposed new definition of "specified housing supply" to correct any previously unreported or misreported transitional information in respect of your specified housing supplies without incurring any penalty (refer to Question 9).

4. What transitional information am I required to report in respect of my specified housing supplies?

For each reporting period, you are required to report the following transitional information in respect of specified housing supplies you made on a province-by-province basis:

• the total amount of the consideration, not including GST/HST, for all of the specified housing supplies for which the GST or federal part of the HST became payable in that reporting period; and
• the total number of specified housing units (total number of units) for which the GST or federal part of the HST became payable in that reporting period.

There is no change to the type of transitional information that you are required to report in respect of specified housing supplies. You would still be required to report the total consideration and total number of units in respect of all specified housing supplies for the reporting period in which the GST or federal part of the HST became payable on those supplies.

5. How do I report the transitional information for my specified housing supplies?

You have to report the transitional information in respect of your specified housing supplies in your GST/HST return for the reporting period in which the GST or federal part of the HST became payable on those supplies.

If you are registered for the GST/HST, you have to file your GST/HST return using GST/HST NETFILE for any reporting period in which you have transitional information to report in respect of specified housing supplies. The transitional information must be reported on lines 1100 and 1101 of Schedule A, Builders – Transitional Information, of the GST/HST NETFILE return. You have to report the total consideration for all of the specified housing supplies on line 1100 of Schedule A and report the total number of units on line 1101 of Schedule A.

For more information, refer to GST/HST Info Sheet GI-118, Builders and GST/HST NETFILE.

If you are not registered for the GST/HST, you must report the transitional information in respect of specified housing supplies by attaching a letter to your Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (Non-Personalized), for the reporting period in which the GST or federal part of the HST became payable on your specified housing supplies. The letter must specify the total consideration for all of the specified housing supplies and the total number of units.

For more information, refer to GST/HST Info Sheet GI-101, Harmonized Sales Tax: Information for Non-Registrant Builders of Housing in Ontario, British Columbia, and Nova Scotia, and GST/HST Info Sheet GI-164, Prince Edward Island: Transition to the Harmonized Sales Tax - Information for Non-Registrant Builders.

6. When would the proposed change to the definition of "specified housing supply" take effect?

The proposed change to the definition of "specified housing supply" would apply beginning on the first day of the reporting period of a builder that includes March 23, 2016, and would apply for all future reporting periods.

For example, if you file your GST/HST returns monthly based on calendar months, you would have to use the new definition of "specified housing supply" to determine the transitional information in respect of such supplies that you have to report in your GST/HST return for March 2016, which is required to be filed by April 30, 2016.

7. All of my sales of grandparented housing have already closed and both ownership and possession for all of that housing has already been transferred. Do I need to be concerned with the proposed new definition of "specified housing supply"?

If both ownership and possession have already transferred for all of your sales of grandparented housing, you will not need to be concerned with the proposed change to the definition of "specified housing supply" in future reporting periods.

However, you will need to know about the proposed change to the definition of "specified housing supply" if you wish to take advantage of the proposed election for simplified reporting of specified housing supplies. The proposed election is discussed in the following section.

Proposed Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies

8. What is the purpose of the proposed election?

The proposed election would allow a person, such as a builder, that makes specified housing supplies for which the GST or federal part of the HST became payable after June 2010 and before May 2016 to use the proposed new definition of "specified housing supply" to report the transitional information in respect of their specified housing supplies. The transitional information for specified housing supplies is discussed in Question 4.

9. Why would a person want to file the proposed election?

The proposed election would be an opportunity for a person to report previously unreported transitional information and/or fix mistakes they may have made when they previously reported transitional information in respect of specified housing supplies without incurring a penalty for not previously reporting that transitional information or for having misreported it. It should be noted that the penalties for not reporting, or for having misreported the transitional information may be significant. If a person that has made specified housing supplies for which the GST or federal part of the HST became payable after June 2010 and before May 2016 were to file the proposed election, they would be able to use the proposed new definition of "specified housing supply" to report the transitional information in respect of their specified housing supplies. By electing to use the new definition, it would be easier for a person to identify their specified housing supplies and accurately report the transitional information in respect of such supplies to the CRA, thereby potentially lessening the risk of being liable for penalties under section 284.01.

Without filing the proposed election, a person that had to report transitional information in respect of specified housing supplies would remain liable to provide all of the transitional information in respect of such supplies, based on the original definition of "specified housing supply".

Penalties under section 284.01 may be assessed for any unreported or misreported transitional information in respect of specified housing supplies for any reporting period of a person based on the original definition, or where the election is filed, based on the proposed new definition of "specified housing supply". In accordance with subsection 298(4), this could include reporting periods that are statute barred.

10. Who would be able to file the proposed election?

Any person, such as a builder, that made a specified housing supply (or supplies) for which the GST or federal part of the HST became payable after June 2010 and before May 2016, would be eligible to file the proposed election.

11. I am no longer in the home construction industry. Would I be able to file the proposed election?

Yes. Any person, such as a builder, that made a specified housing supply (or supplies) for which the GST or federal part of the HST became payable after June 2010 and before May 2016, could file the proposed election.

12. I am no longer registered for the GST/HST. Would I be able to file the proposed election?

Yes. Any person, such as a builder, whether registered for the GST/HST or not, could file the proposed election if the person made a specified housing supply (or supplies) for which the GST or federal part of the HST became payable after June 2010 and before May 2016.

13. If I were to file the proposed election, would I be subject to penalties for transitional information that was required to be reported for a previous reporting period, but that I had not reported or that I had reported incorrectly?

No. If you were to file the proposed election and report all of the transitional information in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply") no penalty would apply for not previously reporting that transitional information or for having misreported it to the CRA.

If the proposed election were not filed, penalties under section 284.01 may be assessed for any unreported or misreported transitional information in respect of specified housing supplies (based on the original definition of "specified housing supply") for any reporting period of a person that ends on or before March 22, 2016. In accordance with subsection 298(4), this could include reporting periods that are statute barred.

14. If I were to file the proposed election and make a mistake in reporting the transitional information in respect of the specified housing supplies (based on the proposed new definition of "specified housing supply") would I be subject to penalties?

Yes, penalties may apply if you were to file the proposed election and misreport the transitional information you would be providing in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply").

15. What is the penalty under section 284.01?

If the total consideration for specified housing supplies is not reported as required, section 284.01 of the ETA and section 11 of the Electronic Filing and Provision of Information (GST/HST) Regulations impose a penalty of up to 10% of the value of the consideration that is not reported as required.

If the total number of units is not reported as required, section 284.01 of the ETA and section 13 of the Electronic Filing and Provision of Information (GST/HST) Regulations impose a penalty of $250 for each unreported or misreported specified housing unit.

The amount of the penalty, which may be significant, is not affected by the proposed changes.

16. I am a builder that sells new detached housing. I am registered for GST/HST purposes and I file my GST/HST returns on a monthly basis using calendar months. With respect to my sales of grandparented housing, both ownership and possession of all of the housing have transferred to the purchasers, and the federal part of the HST became payable after June 2010 and before May 2016. I had no systems in place to determine which of my sales of grandparented housing were specified housing supplies (based on the original definition of "specified housing supply").

The following table illustrates the number of grandparented housing units I sold and when the sales closed. The number of specified housing units in the table represents those sales where the total consideration for each sale was $450,000 or more. I have no information to determine if any of my other sales of grandparented housing are specified housing supplies since I have no information with respect to whether the purchasers were entitled to claim GST/HST new housing rebates or GST/HST new residential rental property rebates.

Although I have filed all of my GST/HST returns, I never reported any transitional information in respect of my specified housing supplies. In my case, what is my potential liability for penalties if I do not file the proposed election for simplified reporting of specified housing supplies? Is it beneficial for me to file the proposed election?

The following penalty calculation is based on the assumption that you have correctly determined which of your sales of grandparented housing are specified housing supplies based on the original definition of "specified housing supply" and that the total consideration for each specified housing supply was $450,000. The penalty could be higher if you have made an error in making this determination (that is, if it were determined that GST/HST new housing rebates or GST/HST new residential rental property rebates were not available for some of the other sales of grandparented housing) or if the total consideration for one or more of the specified housing supplies exceeded $450,000.

• The penalty for not reporting the total amount of the consideration for these specified housing supplies on line 1100 as required would be $4,050,000 which would be calculated as follows:
  • Year 1 = (42 units × $450,000 × 10%) = $1,890,000
  • Year 2 = (30 units × $450,000 × 10%) = $1,350,000
  • Year 3 = (18 units × $450,000 × 10%) = $810,000
• The penalty for not reporting the total number of units for these specified housing supplies on line 1101 as required would be $22,500 which would be calculated as follows:
  • Year 1 = (42 occasions × $250) = $10,500
  • Year 2 = (30 occasions × $250) = $7,500
  • Year 3 = (18 occasions × $250) = $4,500

Thus, the total penalty for not reporting the transitional information would be $4,072,500.

If you were to file the proposed election and report all of the transitional information in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply") no penalty would apply for not previously reporting it as required. By making the proposed election and using the proposed new definition, it would be easier for you to determine the transitional information that you are required to report to the CRA. However, penalties may apply if you were to file the proposed election and you fail to report, or you misreport, the transitional information you would be reporting in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply").

17. I am a builder that sells new detached housing. I am registered for GST/HST purposes and I file my GST/HST returns on a monthly basis using calendar months. With respect to my sales of grandparented housing, both ownership and possession of all of the housing have transferred to the purchasers, and the federal part of the HST became payable after June 2010 and before May 2016.

Although I have filed all of my GST/HST returns and reported transitional information in respect of my specified housing supplies, I misreported some of the information. Specifically, there are five additional specified housing units that I should have reported but, at the time, I did not know they were specified housing supplies. In my case, what is my potential liability for penalties if I do not file the proposed election for simplified reporting of specified housing supplies? Is it beneficial for me to file the proposed election?

The following penalty calculation illustrates the amount of the penalty that would apply as a result of misreporting the five specified housing units, based on the original definition of "specified housing supply". It is assumed that the total consideration for each additional specified housing supply is $400,000.

• The penalty for misreporting the total amount of the consideration for these five specified housing supplies on line 1100 as required would be $200,000, which would be calculated as follows:
  • 5 units × $400,000 × 10% = $200,000
• The penalty for misreporting the total number of units for these five specified housing supplies on line 1101 as required would be $1,250 which would be calculated as follows:
  • 5 occasions × $250 = $1,250

Thus, the five misreported specified housing supplies would result in a penalty of $201,250 for misreporting the transitional information to the CRA.

However, if you were to file the proposed election and report all of the transitional information in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply") no penalty would apply for misreporting the transitional information. In fact, if you were to file the proposed election, you would not even have to report transitional information in respect of these five sales because they would not be specified housing supplies (based on the proposed new definition of "specified housing supply") given the total consideration for each sale is less than $450,000. By making the proposed election and using the proposed new definition, it would be easier for you to determine the transitional information that you are required to report to the CRA for all of your specified housing supplies and reduce any potential liability for penalties for any other misreporting that you may have made in the past.

18. I have already been assessed penalties for not reporting transitional information or for having misreported it for specified housing supplies (based on the original definition of "specified housing supply"). If I were to file the proposed election, would these penalties be cancelled?

If you were to file the proposed election and provide all of the transitional information in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply") any penalty under section 284.01 that had been assessed for not previously reporting, or for misreporting, that transitional information for specified housing supplies (based on the original definition of "specified housing supply") would be cancelled by way of reassessment. However, penalties may apply if you were to file the proposed election and you fail to report, or you misreport, the transitional information you would be reporting in respect of your specified housing supplies (based on the proposed new definition of "specified housing supply").

19. What type of information would I have to provide to complete Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies?

To complete the election portion of Form RC4617, you would have to indicate the reporting period for which you are filing the election. The proposed election could only be filed for a reporting period that ends on or after May 1, 2016, and before January 1, 2017, or if no reporting period ends during that period, the first reporting period that ends after December 31, 2016. Form RC4617 is available on the CRA website.

With respect to completing the schedule to the return portion of Form RC4617, for each calendar year and according to the province in which the grandparented housing is located, you would also have to enter the total consideration and the total number of units (that is, the transitional information) for all specified housing supplies (based on the proposed new definition of "specified housing supply") for which the GST or federal part of the HST became payable:

• where the housing is situated in Ontario or Nova Scotia, after June 2010;
• where the housing is situated in British Columbia, after June 2010 and before April 2013; and
• where the housing is situated in Prince Edward Island, after March 2013.

For the calendar year that includes the last day of the reporting period for which this proposed election is filed, you would have to include the total consideration and total number of units (that is, the transitional information) for all specified housing supplies up to, and including, the last day of the reporting period.

20. If I were to file Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies, would I only report transitional information that I either did not previously report or that I think I misreported?

No. In completing the schedule to the return portion of Form RC4617, you must make a full disclosure of the transitional information for all of your specified housing supplies (based on the proposed new definition of "specified housing supply") for which the GST or federal part of the HST became payable in the reporting period for which you file the proposed election and in all previous reporting periods. This information must be reported by calendar year and by province. This applies even if you had already correctly reported some of that transitional information based on the proposed new definition of "specified housing supply".

If you were to file the proposed election, the CRA would accept all of the transitional information you provide in the schedule to the return portion of Form RC4617 as being reported and would no longer take into account the total consideration and total number of units, if any, that you had previously reported in respect of specified housing supplies (whether based on the proposed new definition or the original definition of "specified housing supply") in Schedule A of your previously filed GST/HST NETFILE returns.

21. I am a builder that is registered for GST/HST purposes. Within my company, there are divisions that file separate GST/HST returns. Would I file one Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies, that would apply to all of these divisions or would each division have to file its own form?

You would complete the election portion of one Form RC4617 that would apply to you and all of your divisions. With your election, you would have to attach a separate page to provide the GST/HST registration number for each division that has been authorized to file separate GST/HST returns (that is, your business number followed by the RT program account number for the particular division [for example, 123456789 RT0002]). With respect to completing the schedule to the return portion of that Form RC4617, you would have to report the transitional information by calendar year and by province in respect of the specified housing supplies made by you, including any of your divisions that are not authorized to file separate GST/HST returns (that is, the schedule to the return portion of that Form RC4617 in which you make the election should not include transitional information pertaining to specified housing supplies made by your divisions that have been authorized to file separate GST/HST returns). The information for each filing division must be kept separate from the information of the other divisions. Therefore, each of your divisions that have been authorized to file separate GST/HST returns would complete a separate schedule to the return portion of Form RC4617 to report the transitional information (by calendar year and by province) in respect of specified housing supplies made by them. They would note their RT program account number on the schedule to the return portion of Form RC4617 and they would give the completed schedule to you. You would collect all of the schedules to the return completed by your divisions that have been authorized to file separate GST/HST returns and attach those schedules to the return to your Form RC4617 and file all of them together at the same time.

Note that this does not apply for corporations that have separately incorporated divisions. In that case, each separately incorporated division would have to file its own election.

22. If I were to file Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies, would I have to amend any of the GST/HST returns I filed for previous reporting periods?

No. In completing the schedule to the return portion of Form RC4617, you would provide, by calendar year and by province, the total consideration and total number of units (that is, the transitional information) in respect of all of your specified housing supplies (based on the proposed new definition of "specified housing supply") for which the GST or federal part of the HST became payable in the reporting period for which you file the election and in all previous reporting periods.

The CRA would accept all of the transitional information you provide in the schedule to the return portion of Form RC4617 as being reported and would no longer take into account the total consideration and total number of units, if any, that you had already reported in respect of specified housing supplies for which the GST or federal part of the HST became payable after June 2010 and before the reporting period for which you file the election.

23. I am a builder in Prince Edward Island and I am registered for GST/HST purposes. I file my GST/HST returns on a quarterly basis using calendar quarters. I already reported transitional information for specified housing supplies in some of my quarterly GST/HST returns in 2014 and 2015. In my GST/HST return for my reporting period ending March 31, 2016, I reported transitional information for specified housing supplies based on the proposed new definition of "specified housing supply" since that reporting period includes March 23, 2016 (that is, the proposed new definition applies for that whole reporting period). I would like to file Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies, for my reporting period ending June 30, 2016. Would I have to report the transitional information that I already reported based on the proposed new definition in my reporting period ending March 31, 2016?

Yes. In completing the schedule to the return portion of Form RC4617, you would have to make a full disclosure of the transitional information for all of your specified housing supplies (based on the new definition of "specified housing supply") for which the federal part of the HST became payable after June 2010 and on or before June 30, 2016 (that is, the last day of the reporting period for which you file the election). If you were to file the proposed election, the CRA would accept all of the transitional information you provide in the schedule to the return portion of Form RC4617 as being reported and would no longer take into account the transitional information you had previously reported in Schedule A of your GST/HST NETFILE return for your reporting period ending March 31, 2016, or for any other previous reporting period.

24. I am a builder in Ontario that is registered and a selected listed financial institution for GST/HST purposes. I file my GST/HST returns on a quarterly basis using calendar quarters. My fiscal year is a calendar year. I am required to report transitional information for specified housing supplies in Section B3 of Part G of Form GST494, Goods and Services Tax/Harmonized Sales Tax Final Return for Selected Listed Financial Institutions. I would like to file Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies, for my reporting period ending June 30, 2016, and report the required transitional information on the election form. Would I also have to report the same information on Form GST494 for my 2016 fiscal year?

No. In completing the schedule to the return portion of Form RC4617, you would have to provide the transitional information for all of your specified housing supplies (based on the new definition of "specified housing supply") for which the federal part of the HST became payable after June 2010 and on or before June 30, 2016 (that is, the last day of your reporting period in which you file the election). If you were to file the proposed election, the CRA would accept all of the transitional information you provide in the schedule to the return portion of Form RC4617 as being reported and would no longer take into account the transitional information you had previously reported in Section B3 of Part G of Form GST494 for any other previous reporting period. The information that you would report in Section B3 of Part G of Form GST494 for your 2016 fiscal year should not include information for specified housing supplies for the reporting period in respect of which Form RC4617 is filed, or for any prior reporting period in the fiscal year. As such, you would only include in Section B3 of Part G of Form GST494 for your 2016 fiscal year information for specified housing supplies for the last two quarters of 2016.

25. Would the proposed election affect how I report transitional information for specified housing supplies going forward?

No. The election would only affect the reporting of the total consideration and total number of units (that is, the transitional information) in respect of specified housing supplies (based on the proposed new definition of "specified housing supply") for which the GST or federal part of the HST became payable after June 2010 and on or before the last day of the reporting period for which you file the election.

The proposed new definition of "specified housing supply" would automatically apply to all specified housing supplies for which the GST or federal part of the HST becomes payable in your reporting period that includes March 23, 2016, and in all subsequent reporting periods. Therefore, no election would be necessary to use simplified reporting of specified housing supplies going forward.

26. Would the proposed election affect the net tax amount on my current or previously filed GST/HST returns?

No. The total consideration and total number of units (that is, the transitional information) that you would be reporting do not form part of the net tax calculation. Therefore, there would be no change to your net tax for any reporting period (that is, there would be no increase in the amount of any net tax owing for any reporting period, nor would there be an increase in the amount of any net tax refund for any reporting period).

27. When could I file the proposed election?

You could file the proposed election for a reporting period that ends on or after May 1, 2016, and before January 1, 2017, or if no reporting period ends during that period, the first reporting period that ends after December 31, 2016. Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies, is available on the CRA website.

You would have to file the proposed election on or before the due date of the GST/HST return for the reporting period for which you make the election. It is important to note that the CRA cannot accept a late filed election to use simplified reporting of specified housing supplies.

28. How would I file the proposed election?

You would file the proposed election by fully completing Form RC4617, Election and Schedule to a Return for Simplified Reporting of Specified Housing Supplies , and mailing it to your tax centre. To get the address of your tax centre, go to www.cra-arc.gc.ca/tso/ .

Further information