One conversation with a CPA with GST/HST expertise could save you hundreds of thousands in tax on your construction development.
If you’re planning to build property in Ontario, do not start without calling a CPA in Ottawa with GST/HST expertise. Do not wait. Before you start anything (not after construction, not when the building is finished, not when your lawyer tells you to apply for the rebate).
As a CPA in Ottawa who has worked with builders in Ottawa applying for GST/HST rebates, and during disputes with CRA, I see the same mistake repeatedly. People start building first, and only think about tax when the project is complete. By then it can be too late. Under Canadian GST/HST tax law, construction and development activities are commercial activities for GST/HST purposes.
That means once you start:
If you don't register for GST/HST at the beginning of your activity, then you're potentially leaving thousands of dollars on the table. And you may already be considered to be carrying on a commercial activity. The CRA expects you to register for HST at the beginning of that activity, not at the end. If you’re properly registered, you can claim Input Tax Credits (ITCs) on the HST paid for things like:
That’s often hundreds of thousands of dollars in recoverable HST on larger builds. The problem I see all the time is that many people call me after their project is complete and say something like “Hey, we just finished our four-unit rental building. How do we get all the HST back?”
New client finished building a 30 unit building. First question I ask : “You’re registered for HST already, right?” Silence...Because they never registered.
They assumed the rebate application at the end would take care of everything. It doesn’t work that way. If the CRA determines you were required to be registered earlier, you may face:
We had to dispute with CRA and prove that the client met all the criteria after the fact, and it took extra time and delayed the client's refinancing and cash flow.
The new residential rental property rebate can return a significant portion of HST paid on construction of qualifying rental housing.
But the rebate only works smoothly when the project was structured properly from the beginning.
That means:
You have to prepare everything right from the beginning. These issues are much easier to handle before construction begins than after the building is completed.
There’s a big difference between reading about the rebate online and actually executing the process correctly.
As a CPA in Ottawa, I’ve helped property builders and developers navigate the HST rules for new rental housing, including registration, compliance, disputes, and rebate claims.
If you’re planning to build a rental property, the smartest first step is not hiring a contractor.
It’s making sure the tax structure is correct before you start spending money.
Because once construction is underway, fixing the tax side becomes much harder.
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This is not legally binding tax advice. This is educational analysis. Say hello if you need help.
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Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without a specific consultation. Lucas CPA Professional Corporation will not be held liable for any problems that arise from the usage of the information provided on this page.
