A buyer is purchasing a newly constructed residential property in Ontario for $650,000. The provincial rebate for new housing GST/HST applies to homes priced up to $450,000. How will HST be calculated on this transaction?

Question: A buyer is purchasing a newly constructed residential property in Ontario for $650,000. The provincial rebate for new housing GST/HST applies to homes priced up to $450,000. How will HST be calculated on this transaction?

Answer options:

• HST at 13% will be applied to the full $650,000, with no rebate.
• HST at 13% will be applied to the first $450,000, and noHST on the remainder. ✅ A federal rebate will apply to the federal portion of HST on the first $350,000, and a provincial rebate to the provincial portion on the first $450,000, with full HST on the balance.
• HST will be applied at 13% only on the amount exceeding $450,000.

Correct answer: A federal rebate will apply to the federal portion of HST on the first $350,000, and a provincial rebate to the provincial portion on the first $450,000, with full HST on the balance.

Explanation: For new homes up to $350,000, a federal rebate applies to 36% of the 5% federal portion of HST. For homes up to $450,000, a provincial rebate applies reducing the provincial portion of HST by 75%. For purchase prices above $450,000, the provincial rebate phases out and full HST is generally payable on the amount above $450,000.