HST on assignment sale: taxable, deposit excluded only in writing

What does section 192.1 tax, and since when?

Section 192.1 of the Excise Tax Act deems the assignment of a purchase agreement with a builder for a single unit residential complex or a residential condominium unit to be a taxable sale of real property, an interest in that home, when anyone other than the builder makes it laws-lois.justice.gc.ca. The CRA applies it to assignment sales from May 7, 2022 on, for newly constructed or substantially renovated housing canada.ca. It was enacted in 2022 (S.C. 2022, c. 10, s. 52), even though GST/HST Notice 323 still carries "Proposed" in its title canada.ca.

The tax base is the consideration for the assignment minus the part that is solely a reimbursement of the deposit paid to the builder, and that subtraction is zero unless the assignment agreement indicates the deposit part in writing laws-lois.justice.gc.ca. The rate follows the province of the home: 13% HST in Ontario, 14% in Nova Scotia since April 1, 2025, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, and 5% GST elsewhere canada.ca. The full table is on the HST rates by province page.

Who collects the tax, and on which form?

Usually the assignor. Notice 323 says the change didn't move responsibility: the assignor generally collects the GST/HST and remits it, and a non resident assignor's buyer pays the tax directly canada.ca. A seller of taxable real property collects even if not registered, and an unregistered seller reports on Form GST62 canada.ca.

The forms and deadlines in the table come from Guide RC4052, which also says the tax on a taxable sale of real property becomes payable on the earlier of the day ownership transfers and the day possession transfers canada.ca. Payments of $10,000 or more must be made electronically or at a financial institution. A registrant assignee that will use the home 50% or less in commercial activities still files GST60 rather than its regular return.

Worked example: a written deposit clause saves $9,100 of HST

Your client signed with a Toronto builder for a $700,000 condo and paid $70,000 in deposits. Before closing they assign the agreement for $130,000: $70,000 to reimburse the deposits and $60,000 of profit. The assignee takes over the $700,000 contract with the builder.

The only difference between the columns is one sentence in the assignment agreement, and it's worth $9,100. The CRA's real estate compliance page still says the total amount received on an assignment, including any deposit, is subject to GST/HST canada.ca. Under section 192.1 that is only the result when the agreement doesn't identify the deposit laws-lois.justice.gc.ca.

Two smaller points. The $70,000 of deposits carried no HST when your client paid them, because a deposit isn't treated as a payment until the builder applies it to the price canada.ca. And a builder's assignment fee is generally a taxable supply by the builder in its own right canada.ca. State in the agreement whether the $130,000 is plus HST, because your client owes the $7,800 either way.

How does the assignment change the buyer's new housing rebate?

The assignee can claim the GST/HST new housing rebate if they qualify, but the price tests add the assignment to the builder price. Subsection 254(2) counts the consideration for the home and for any other taxable supply of an interest in it, and the rebate uses the total tax paid on both laws-lois.justice.gc.ca. Guide RC4028 phrases the same test as the purchase price for the house plus the price of a taxable assignment, before tax, below $450,000 canada.ca.

Here is the effect on a cheaper home. Your client's buyer takes over a $380,000 townhouse agreement in Alberta, where only the 5% GST applies, and pays $30,000 of taxable consideration on the assignment, the deposit having been identified in writing.

So the assignment costs this buyer $1,500 of GST and $1,890 of rebate. In the Toronto example the total consideration is $760,000, so the federal rebate is nil. The Ontario rebate is 75% of the provincial part capped at $24,000, and 75% of the $56,000 provincial part on the builder price alone is $42,000, already past the cap, so none of the HST paid to the assignor comes back canada.ca.

Which rebate filing traps should you check?

Only one application is allowed per home, so the buyer can't claim once through the builder and again for the tax paid to the assignor canada.ca. Only the builder can pay or credit the rebate, and if it does, the buyer may not file another application for the tax paid to the assignor. A buyer who paid tax to both should consider filing Application Type 2 directly with the CRA to claim both amounts canada.ca.

That choice matters only when the tax paid to the builder leaves the rebate under its cap: a builder price below $350,000 for the federal $6,300, or below $400,000 for the Ontario rebate (75% of the 8% provincial part, capped at $24,000). Above those prices the assignment only enters through the price test. The assignor gets no new housing rebate: GI-120 says ownership transfers to the assignee rather than the assignor, and an assignor selling as a builder never acquired the home as a primary residence canada.ca.

The first time home buyers' GST rebate has its own bar: it isn't available where the purchase agreement is varied, amended or assigned and the original agreement was entered into before March 20, 2025 canada.ca.

How is the assignor's profit taxed for income tax?

As business income, in the year the rights are assigned, not the year the building closes canada.ca. Subsection 12(13) of the Income Tax Act includes a right to acquire a housing unit in Canada in the flipped property definition, so a presale agreement held for less than 365 consecutive days is fully taxed business income and a loss is deemed nil, unless a listed life event applies laws-lois.justice.gc.ca. The life events and reporting are on the property flipping rule page.

Keep the two taxes apart on the file. The $60,000 profit in the Toronto example is the starting point for income tax, while the $7,800 of HST belongs to the CRA under the sales tax rules. A sale of an occupied resale home is a different question, covered on the GST on residential real estate page.