GST Alert (Commercial Real Estate Alert)

INTRODUCTION

On January 1, 2008, the federal goods and services tax (GST) rate will drop from 6% to 5%. As the deadline approaches for yet another 1% GST rate reduction, many buyers, sellers and lessors of property have questions about the timing and application of the new 5% rate. If you are a developer, a new home seller or buyer, or a commercial landlord you will need to understand the following rules and take careful note of the dates that any payments are made or become due as that will influence the rate of GST that must be applied.

GENERAL RULE

The general rule is:

• If GST becomes payable, or is paid without having become payable, before January 1, 2008, the 6% rate will apply.