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Monday, August 12 2019
Substantially Renovated Properties and GST

GST is applied on the sale of every newly constructed home. Remittance of the GST to the government is the responsibility of the seller, who's to charge the payable amount to the buyer as an addition to the purchase price. The seller is also able to claim the GST paid on expenses related to the property.

 

In cases where the purchased house is to be used as a primary place of residence, a partial GST rebate can be applied. The bottom line is that GST is applicable to every new home sale.

 

The area most people find confusing is that of renovated buildings and the applicable GST rules.

 

How does the CRA interpret renovation as it applies to buildings and GST? When a house has been renovated such that it looks new, what GST rule is applicable?

 

This blog post will try to give answers to all these questions.

 

We'd start off by trying to get a clear understanding of how the CRA determines the status of a house (new or old) as regards GST payment. And to do that, we'd first have to dissect and understand the meaning of a key phrase that holds all the answers we need  - substantial renovation.

 

What is Substantial Renovation?

 

A residential complex that has been substantially renovated is accorded the same GST treatment as a new building.

 

In this case, a residential complex is defined as a building or parts of a building that's primarily occupied by the individual owner or his/her family members.

 

So what does it mean to substantially renovate a building?

 

According to the official website of Canada, “substantial renovation” means:

 

"The renovation or alteration of a building to such an extent that all or substantially all of the building that existed immediately before the renovation or alteration was begun, other than the foundation, external walls, interior supporting walls, floors, roof and staircases, has been removed or replaced where, after completion of the renovation or alteration, the building is, or forms part of, a residential complex."

 

The website still goes on to state that:

 

"Generally, all or substantially all, is interpreted as meaning 90% or more."

 

Now, that sounds complex. Let me break it down into simpler bits that could be easily understood.

 

Think of a building made up of a living room, kitchen and five bedrooms. If just one or two of the rooms out of over seven or so rooms in this building is substantially renovated (such that drastic changes are made).

 

It doesn't matter how expensive this renovation was, the entire house won't be viewed as if it was substantially renovated. And it won't pass as a new house that needs full GST payments - as it doesn't meet the 90% or more clause.

 

In a similar way, if a tonne of cash was spent to renovate the roof, staircase, external walls and foundation, but much wasn't spent to renovate much of the internal part of the building, the house would still not be seen as substantially renovated. No full GST payments here too.

 

Apart from the percentage of rooms covered, there are also other "fair and reasonable methods" that can be applied to determine if a building has been substantially renovated. Some of which include square footage renovated, compared to the total available floor space; square footage of wall and floor space renovated, compared to total available wall and floor space; etc.

 

All of this information is available in an (almost) easy to understand form concerning other scenarios like conversion, mixed-use buildings, guest/granny suites, major additions zee and the likes on the Canadian official site.

 

 

Let's Help You

 

If you're confused about how and if GST is applicable on a property being developed for resale, I would be happy to help. Call 778.801.5789 or email info@bloomaccounting.ca

Saturday, August 10 2019
2019 Statutory Holidays - Stat Pay - How Does It Work?

If an employee worked on a statutory holiday, does he/she receive statutory pay?

The answer is not always, and depends if the employee is eligible. 


Statutory Pay Eligibility

In order to qualify for statutory pay rates both of these conditions must be met:

1) Must have been employed for at least 30 days before the statutory holiday; AND

2) Must have worked at least 15 of the 30 days before statutory holiday

For example, a part-time employee who worked less than 15 days out of the 30 days before the holiday and ended up working on the statutory holiday would be paid at normal rates and not qualify for statuatory rates.

 

How Much is Statutory Pay?

All eligible employees receive an average day's pay regardless if they worked on the statutory holiday. So if they did not work on the statutory day, they receive a day of paid time off. 

If an employee worked on the statutory holiday, he/she should receive an average days pay PLUS 1.5 times wages for the day.

For example if Margaret's regular rate is $20 / hour and she met the eligibility requirements above. On Canada Day she worked 8 hours.

Her Statutory Pay is calculated as follows:
$160 (average days pay) Plus $240  (8 hours x $30 ($20 x 1.5)) = $400 
Works out to be $50 / hour, or 2.5 Times Regular Pay

List of Canadian holidays in 2019

Holiday Date in 2019 Observance
New Year's Day January 1, Tuesday National
Islander Day February 18, Monday PEI
Louis Riel Day February 18, Monday MB
Heritage Day February 18, Monday NS
Family Day February 18, Monday BC, AB, SK, ON, NB
Valentine's Day February 14, Thursday Not a stat holiday
Leap Day Not a leap year -
St. Patrick's Day March 17, Sunday Not a stat holiday
Good Friday April 19, Friday National except QC
Easter Monday April 22, Monday QC
Mother's Day May 12, Sunday Not a stat holiday
Victoria Day May 20, Monday National except NB, NS, NL
Father's Day June 16, Sunday Not a stat holiday
Aboriginal Day June 21, Friday NWT
St. Jean Baptiste Day June 24, Monday QC
Canada Day July 1, Monday National
Civic Holiday August 5, Monday AB, BC, SK, ON, NB, NU
Labour Day September 2, Monday National
Thanksgiving October 14, Monday National except NB, NS, NL
Halloween October 31, Thursday Not a holiday
Remembrance Day November 11, Monday National except MB, ON, QC, NS
Christmas Day December 25, Wednesday National
Boxing Day December 26, Thursday ON
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Bloom Accounting Services
New Westminster
Chilliwack
Canada
604.218.5119
info@bloomaccounting.ca

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