The GTA Construction Report – June 2009 – PAGE A3
HST Update: Affordability remains major concern as OHBA meets with Liberals
MATTHEW DESROSIERS – The GTA Construction Report Editor
going to happen,” he said. “I going to be underground,
have no idea what she’s talk- easy.”
Since April 9, the Ontario taxing new condominium’s ing about there.” Customers are already
Home Builder’s Unlike new homes, reno- going to the underground Associa- that are built for rent the full
tion’s (OHBA) president eight per cent. vation projects do not re- economy for renovation
Frank Giannone and his staff For example, a trend in ceive any exemptions or work, despite only paying
have been meeting with On- Toronto over the past five to rebates under the current around two per cent tax on
tario’s Ministry of Finance six years (which has begun HST guidelines. What this the cost of the project. If
to discuss the greater impli- to spread to Ottawa) is for means for Martin, who owns they now have to charge the
cations of the harmonized investors to come in and buy the renovation company in full amount, Martin doesn’t
sales tax (HST) on the a few units to rent. Under the Ottawa that bears his name, know how many smaller
province’s homebuilding in- current GST system, the in- is the full 13 per cent will be businesses will survive, let
dustry. vestor could submit a form charged to customers. alone some of the larger
In the provincial budget confirming they’re renting In an industry already ones.
released earlier this year, the the condo for a minimum of fighting against a growing Giannone said he’s not
Liberal government pro- one year, and receive rebates threshold has never changed, GST, if you purchase some- underground economy and convinced the government
posed the harmonization of on lower GST rates. while the average price of thing that you pay GST on, struggling to stay viable, this truly understands the impli-
the PST and GST into one “In this case (HST), you houses continues to increase. you can get reimbursed for tax increase could destroy cations for the renovation in-
tax, called the HST. This 13 don’t have that,” he ex- “If they don’t agree to that, receiving a credit back what little progress they’ve dustry. However, he remains
per cent tax would effec- plained. “You’re going to index those (HST thresh- on what you paid in tax. made, he said. cautiously optimistic they
tively replace the existing stiffle condominium pur olds), they’re misleading the She used lumber as an- “Between this and will come around despite
taxes. chases in Toronto, and that’s public because eventually, example. (mandatory WSIB cover- some MPPs not making
Immediately, home- really how we provide rental most of housing will be over “They will be paying age), come next summer the themselves as available for
builders were concerned the stock. In Ottawa, it’s (be- the threshold. We’re asking under the current system renovation industry is going discussion as the OHBA
HST would severely impact coming) fairly similar.” for indexing. They haven’t provincial taxes on (lumber), to be devastated,” said Mar- would like.
the affordability of new Over the past five to six commented yet, but we are but they won’t get reim- tin. “We’re worried mainly “What we’re trying to do
homes in Ontario. Under the years, he said, as much as 50 asking for it.” bursed for that. So they will about the underground econ- is make sure they understand
current system, home buyers per cent of Toronto’s condo- Duncan’s press secretary, actually be saving money on omy and how many people and are aware of the true im-
do not pay the full eight per miniums have been built for Alicia Johnston, said the a single tax, because they are going to be forced (out). plications of harmonization
cent PST on new homes. rent. ministry has been listening will be getting their tax back. Already, 48 per cent of On- on affordability,” he said.
PST is only paid on materi- The OHBA insists their to what the homebuilders That eight per cent will be tario renovators are under “We’re optimistic that
als, which is equal to ap- primary concern is with the have to say. She didn’t say reimbursed.” the table. By this time next they’re going to understand
proximately two per cent affordabilty of new housing. specifically what areas, if Johnston said the HST year, when all this stuff is and correct the unfairness
(instead of the full eight) on Under the current HST any, the ministry are review- will only be taxed once on implemented, it’s going to that exists there.”
the final cost of the home. guidelines, lower-middle ing, or if they were giving the finished product, instead be 70-75 per cent that are
However, under the HST, class citizens will be hit the consideration to the issue of of all the way through con-
the full 13 per cent would be hardest by the tax, Giannone threshold indexing. struction as in the current
charged (five per cent GST, said. “We have been and are PST system.
eight per cent PST). “You’re hitting the lower continuing to work close According to Johnston,-
Despite tax exemptions middle class that wants to go with them,” she said. “We homebuilders have said their
for new housing under from that $400,000 to have been meeting regularly sector will save over $1 bil-
$400,000, and rebates for $500,000 range, and a lot of and frequently as we move lion on taxes they currently
homes up to $500,000, cities in Ontario have that towards creating and an- have to pay.
homebuilders were not satis- lower-middle class, with the nouncing the transition rules “They will see a good
fied. highest marginal rate of tax. which we plan to do as soon deal of savings because of
Giannone said he and his As much as a marginal rate as possible.” the sales tax, not only in
staff have met with the Min- of about 32 per cent.” However, Johnston said input tax credits, but they’re
ister of Finance, Dwight If you were to purchase a the situation isn’t as bad as also getting a corporate in-
Duncan, or his staff of five $400,000, you would pay as the homebuilders make it come tax cut,” she said.
separate occasions. $8,000 in PST, by what the out to be. “That’s going to help their
“Clearly, they’re realiz- current guidelines. However, According to Johnston, bottom line, and we cer-
ing they could have done if you were to then by a 75 per cent of newly con- tainly hope that consumers
some things better as it re- $500,000 home, you would structed homes in Ontario will see that in the end as far
lates to housing,” said Gian- pay $40,000 in PST. fall under the $400,000 as prices go.”
none. “Right now, what “That extra $100,000 you threshold, and are therefore
we’re working with them on want to buy costs you an- not subject to additional tax.
Ontario’s Renovators hit
is the technical aspects of other $32,000 in tax, yet to “The Ontario government
hard
(the HST) and understand is providing the most gener- Michael Martin, chair of- to go from $500,000 to
ing what the cost would be $600,000, it’s only $8,000 ous housing rebate for a the OHBA renovators coun-
to make some changes.” more. From $600,000 to sales tax in the country,” she cil, said he’d like to pass
“We’re hoping they cor said. “The reason economist savings along to the cus-- $700,000, it’s only $8,000
rect some mistakes they’ve more in tax.” have been pushing our gov- tomer, however the renova-
made and understand it’s not Giannone said the current ernment to bring in a single tion industry will be hit too
affecting all Ontarians the guidelines for the HST are sales tax is because it’s good hard by the HST. He doesn’t
way they had hoped.” simply unfair to new home for business.” expect nearly the amount of
Some of the issues cur In fact, Johnston said the savings projected by John-- buyers. And if the govern-
rently on the table include ment refuses to index the tax should actually provide ston.
the full eight per cent taxa- thresholds along with infla- savings for home builders, “I can’t see how anybody
tion of any new rental con- tion, things could only get through input tax credits. is going to do their esti-
struction. Also, any seniors worse. In the HST, the provincial mates, put the PST on the
constructions will pay the In the early 1990s, when portion of the tax reverts to materials, turn around and
full eight per cent, as well as the GST was first intro- the GST’s base, which figure out how much they’re
social housing. duced, rebate thresholds means whatever GST ap- going to get back and try to
An issue that Giannone were set at $350,000 for new plies to is charged the full 13 charge the customer the two
said is sure to cause issues is houses. Since then, the per cent. However, under the per cent, because that’s not
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