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GST/HST Obligations and Rebates for Canadian Builders

This article provides a general overview of who qualifies as a “builder” under the Excise Tax Act
(Canada), R.S.C., 1985, c. E-15 (“ETA”), and outlines the GST/HST obligations that apply to
builders. It additionally highlights available rebates that may help reduce the associated tax
burden.

Who is a “Builder” Pursuant to the ETA?

The term “builder” is defined under subsection 123(1) of the ETA. The definition generally
includes anyone engaged in the business of constructing or substantially renovating a residential complex primarily for sale. In certain cases, the definition covers even those homes held for lease. The above examples presume that the construction or renovation is done in the course of a business or an adventure in the nature of trade. This broad definition can extend beyond traditional home builders to include casual or small-scale residential property renovators.

GST/HST Collection Obligations for Builders

The Canada Revenue Agency (“CRA”) imposes several obligations on someone who is
classified as a “builder.”

Builders are generally required to register for GST/HST and file periodic tax returns that report
the tax collected and paid. As part of these obligations, they must also ensure timely filing. They must also
properly collect and remit the appropriate GST/HST, and maintain accurate supporting documentation. However, small suppliers are generally exempt from these registration obligations pursuant to subsections 148(1) and 240(1) of the ETA.

A builder must charge, collect, and remit GST/HST on all taxable sales of new or substantially
renovated housing. In practical terms, when a newly built (or substantially renovated) home is
sold to a buyer, the seller is expected to add GST/HST to the sale price and later remit that tax to the Canada Revenue Agency. The builder must also maintain proper records and invoices to substantiate input tax credits, for GST/HST paid on construction costs, and to support any rebates claimed.

Self-Assessment

Further, there are rules in the ETA that require a builder to “self assess” GST/HST. Generally,
this self-assessment must be done on the later of (i) substantial completion of the property and
(ii) its occupancy by the builder. Should these self-assessment rules be triggered, the builder is
expected to determine the fair market value of the property at the triggering date and remit the
GST/HST owing. The subsequent sale of the property would generally be GST/HST exempt
pursuant to Part I of Schedule V of the ETA.

A builder who fails to charge GST/HST on a taxable home sale can later be assessed by the CRA
for the unpaid tax. This includes penalties and interest. The CRA can hold builders accountable for any uncollected tax. The average Canadian should be aware of these rules to avoid unintentionally making a taxable sale of their home. On many occasions, Canadian courts have upheld this concept. The idea is that taxpayers who repeatedly build or substantially renovate homes with an intention to sell are in fact builders who must charge GST/HST on those sales.

GST/HST Rebates for New Housing and Renovations

One silver lining for builders is the availability of GST/HST rebates on new or renovated
housing. Builders may also utilize “builder-processed” mechanisms, which generally allow a
builder to credit purchaser rebates directly to the buyer. These rebates can help offset GST/HST
obligations. Some key GST/HST rebate programs include:

  • New Housing Rebate for Houses Purchased from a Builder (Form GST190; can be
  • “builder-processed”)
  • New Housing Rebate for Owner-Built Houses (Form GST191)
  • New Residential Rental Property Rebate (Form GST524)

Taxpayers may find their housing rebate denied not only due to subtle factual disputes, but also
because of errors in legal interpretation, failure to satisfy statutory conditions, or procedural non-compliance. Successfully challenging a denial typically requires persuasive legal argumentation. It also requires careful interpretation of nuanced provisions in the ETA and strict adherence to deadlines for filing objections or appeals.

Get Professional Help with GST/HST

Navigating GST/HST rules in the construction and real estate industry can be complex. Taxpayer
Law is here to help. We have the expertise to assist taxpayers in responding to CRA audits and
appealing CRA assessments. Contact Taxpayer Law today for a consultation.

Tax Avoidance vs. Tax Evasion: What’s the Difference?

No matter how diligent you are with your taxes, understanding the difference between tax avoidance and tax evasion is crucial. While they sound similar, their consequences are vastly different.

What Is Tax Avoidance?

Tax avoidance is the legal practice of minimizing your tax liability within the framework of CRA regulations. This includes strategies such as contributing to RRSPs or TFSAs, claiming tax credits, and pension income splitting.

However, aggressive tax avoidance can attract CRA scrutiny. The line between legal tax planning and questionable tax schemes can be thin. Consulting a tax lawyer ensures your strategies remain compliant with Canadian tax laws.

What Is Tax Evasion?

Tax evasion, on the other hand, is illegal. It involves deliberately misrepresenting your financial situation, for example, underreporting income, inflating expenses, or hiding assets offshore. The CRA aggressively prosecutes tax evasion, and penalties can include hefty fines or imprisonment.

Understanding the distinction between tax avoidance and tax evasion is essential. If you’re unsure whether your tax strategies comply with Canadian law, consult a tax lawyer. Legal guidance can help protect your finances, and your future.

At Taxpayer Law, we provide expert legal support to help you stay compliant and avoid tax-related pitfalls. Contact us today to safeguard your rights and financial well-being.

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Facing Tax Evasion Charges? Why You Need a Tax Lawyer

Are you facing tax evasion charges? This is a serious legal matter that should never be ignored.

The stress of being pursued by the CRA can feel overwhelming, and the potential consequences of tax-related offenses are severe. However, you’re not alone—many hardworking Canadians find themselves in similar situations, unsure of where to turn.

The Canadian tax system is complex, and unintentional errors can sometimes be misinterpreted as tax evasion. Whether the issue stems from unfiled tax returns, discrepancies in reported income, or misunderstandings of tax law, the CRA’s enforcement actions can be relentless. Facing the Tax Court of Canada can be daunting, making the support of an experienced tax lawyer essential.

How a Tax Lawyer Can Help

Investigating the Allegations

A tax lawyer will carefully examine the CRA’s claims, identifying any inaccuracies in their assessment and ensuring your financial records are properly reviewed.

Negotiating with the CRA

Many cases can be resolved without going to trial. A skilled tax lawyer can negotiate on your behalf to seek a fair resolution, minimizing penalties and protecting your interests.

If your case goes to the Tax Court of Canada, a tax lawyer will craft a comprehensive legal strategy tailored to your circumstances.

Providing Peace of Mind

Beyond legal expertise, a tax lawyer offers reassurance. Knowing you have a professional defending your case can ease the stress of facing tax evasion charges.

At Taxpayer Law, we understand the complexities of Canadian tax law and the challenges you may be facing. Contact us today for a consultation and let us help you navigate this difficult time.

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7 Steps to Address Unfiled Canadian Tax Returns

Let’s be honest, dealing with unfiled tax returns or errors in your Canadian taxes can feel overwhelming. But don’t worry, you’re not alone. With the right legal support, you can not only resolve the issue but do so with confidence.

What to Do to Regain Control of Your Tax Situation

The most important thing to remember is not to ignore the situation! Unfiled tax returns can lead to serious complications. If you’re wondering what to do, follow this step-by-step guide to regain control of your tax situation:

1. Gather Documentation

Collect all relevant financial records, including T-slips, receipts, bank statements, and any other documents related to your income and deductions. Thorough documentation is essential for ensuring accurate tax filings.

2. Assess Your Situation

Determine how many years of tax returns remain unfiled and identify any errors in previously filed returns. This assessment is crucial in developing a strategic plan to address your tax issues.

3. Seek Professional Assistance

A tax lawyer provides invaluable legal representation, helping you navigate the complexities of Canadian tax law. They can represent you before the CRA and, if necessary, prevent the case from escalating to the Tax Court of Canada.

4. Consider the Voluntary Disclosures Program (VDP)

The CRA’s Voluntary Disclosures Program (VDP) may provide relief from penalties if you voluntarily come forward to correct unfiled tax returns. A tax lawyer can determine if this is the right option for your situation.

5. File Outstanding Returns

Prepare and submit all outstanding tax returns accurately and completely. A tax lawyer will ensure your filings comply with CRA regulations, helping you avoid further issues.

6. Negotiate Payment Options

If you can’t pay your full tax liability, explore payment arrangements with the CRA. Demonstrating a willingness to cooperate can prevent further collection action.

7. Maintain Ongoing Compliance

Keep your tax records organized and file your returns on time to avoid future issues. Staying compliant reduces the risk of penalties and legal action.

Connect With Tax Lawyers Today

At Taxpayer Law, we specialize in helping individuals navigate the complexities of unfiled tax returns. Whether you need assistance gathering documents, assessing your situation, or negotiating with the CRA, our experienced tax lawyers are here to help. Contact us today to connect with a skilled legal professional.

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Unfiled Tax Returns: How a Tax Lawyer Can Help You Comply

Tax season can be stressful, but what happens if you miss the deadline for filing your Canadian taxes?

The thought of unfiled tax returns can be nerve-wracking, especially if you’re worried about penalties, interest, or even legal action. However, if you’ve missed the deadline, don’t panic—you’re not the first to make this mistake, and you won’t be the last.

Taxpayers across Canada find themselves in similar situations, and there are ways to navigate the complexities of the Canada Revenue Agency (CRA). A tax lawyer can be your lifeline, providing critical legal support to help you get back on track and avoid severe consequences.

Consequences of Unfiled Tax Returns

Failing to file your tax returns on time doesn’t go unnoticed by the CRA. In some cases, the agency may issue an arbitrary tax assessment. This means the CRA estimates what you owe based on available data—often using third-party information or previous filings. However, these assessments rarely account for the deductions or credits you may be entitled to, leading to a much higher tax bill than what you actually owe.

Why You Need a Tax Lawyer

If you have received a CRA assessment and your tax returns remain unfiled, a tax lawyer can help resolve the issue. With legal representation, you can better understand your rights, navigate CRA communications, and identify the best path forward.

A tax lawyer can also help challenge an arbitrary tax assessment. If the CRA’s estimate is too high, you have the right to dispute it by filing a Notice of Objection. This process is complex and involves extensive paperwork and strict deadlines. A tax lawyer will assist in preparing the necessary documentation, ensuring that your actual income and deductions are properly considered.

Complying with CRA Requirements

Even if you’re disputing an assessment, you must still file your tax returns. This is where a tax lawyer can be invaluable, ensuring your returns are filed accurately and on time. Properly filed returns can help reduce penalties and interest, and if you’re facing potential prosecution, professional guidance is crucial.

Contact Experienced Tax Lawyers Now!

Facing unfiled tax returns or an arbitrary tax assessment doesn’t have to be overwhelming. At Taxpayer Law, our tax lawyers are here to support you through every step of the process, helping you resolve your tax issues with confidence.

If you need legal support or simply want to avoid dealing with the Tax Court of Canada on your own, contact us today! Our experienced team is ready to help you stay compliant and avoid the worst-case scenarios.