Category: Sales Tax

When you get married, or start living common-law, it can impact your tax situation. Some of the changes occur immediately (e.g., your eligibility for the GST/HST credit and CCB).

What happens when your marital status changes?

• Your entitlement to the GST/HST credit changes since it is based on previous year “adjusted family net income”. Your adjusted family net income usually increases when you become married or common-law, so you might find that you no longer receive the GST/HST credit. If you are still eligible for the credit, only one of you will receive it, even if you were both receiving it before.
• Your entitlement to the CCB and the WITB change since these are also based on your previous year adjusted family net income.

GST/HST credit

Based on your previous year “adjusted family net income, if a recalculation shows you have been overpaid the GST/HST credit, the CRA will send you a notice with a remittance voucher attached to inform you of the balance owing. The CRA will keep all future GST/HST credit payments or income tax refunds until your balance is repaid.

Canada child benefit (CCB)

Based on your previous year “adjusted family net income, if a recalculation shows that you were overpaid CCB, the Canada Revenue Agency (CRA) will send you a notice with a remittance voucher attached to inform you of the balance owing. The CRA may keep all or a portion of future CCB payments, income tax refunds, or goods and services tax/harmonized sales tax (GST/HST) credits until your balance owing is repaid.

Working income tax benefit (WITB)

Based on your previous year “adjusted family net income, if the CRA overpaid your WITB advance payments, the CRA will notify you on your income tax and benefit return notice of assessment for the taxation year in which you were overpaid. WITB advance payment overpayments will be collected with any amount owing on your income tax and benefit return.

Until your balance is repaid, the CRA may keep all or a portion of any future WITB advanced payments that you apply for and any income tax refunds or goods and services/harmonized tax (GST/HST) credits.

It’s important to let the CRA know when your marital status changes. You can do this through My Account, by phone, or by filing a form RC65. You must also accurately report your marital status when filing your tax return—even if you don’t really feel like you’re living common-law.

New Housing Rebate

Under the new housing rebate, you are entitled to receive the rebate on the condition you will occupy the new home as the principal resident (meaning, you’re living in the new home day-in-and-day-out) for at least the first year.

The new housing rebate, pursuant to subsection 254(2) of the Excise Tax Act (Canada) (the “ETA“), allows for the partial recovery of GST or the federal portion of HST paid for a new or substantially renovated Home that is intended to be used by the buyer (or a relation) as his or her primary place of residence (the “Federal Rebate“).

There are several conditions that must be met to be eligible for the Federal Rebate. The same conditions apply to be eligible for a separate rebate available in Ontario, pursuant to section 41 of the New Harmonized Value-added Tax System Regulation, No. 2 for the provincial potion of HST paid in Ontario (the “Ontario Rebate“).

GST/HST Rebates on New Homes with More Than One Buyer

If you purchase newly constructed real estate in Ontario and want to qualify for the HST rebate new home program, you must use the property as the primary place of residence for yourself or someone closely related to you such as a child, grandchild, brother, sister, or someone you are related to by marriage or common-law partnership.

If anyone is listed on the title (even just for mortgage qualification reasons) that does live on the premises and is not “closely related”, no rebate will be issued.

If you did receive an GST/HST new housing rebate even though one or more of the individuals listed on the title will not be living at the residence and are not closely related, it is advised that you contact the CRA immediately. When the CRA eventually flags the transaction, you will be charged interest on the total amount of the refund.

To qualify for financing, a buyer may consider accepting a gift or loan, or the generous extended family member or friend may offer to be a secured guarantor instead of co-signing the agreement of purchase and sale.