You sent your GST/HST Rebate application to the CRA for processing 30 days ago but you haven’t received your rebate cheque yet. What happened?
With more than 15 years of experience working closely with the CRA we have been able to assist our clients to receive their rebates in an expedited manner, but in those cases where individuals have chosen to complete and submit the rebate forms on their own the following are the top 5 reasons they may not have received their rebates in a timely manner.
1. Was the rebate application sent to the correct processing centre?
While this may not seem like a big issue, in reality sending your rebate applications to the incorrect processing centre can extend the processing timeline by 4 to 8 weeks.
New Housing GST/HST Rebate applicants of Ontario properties should have sent their rebate applications to the Sudbury Tax Centre, while the rest of the country would have sent their applications to the Summerside Tax Centre in PEI.
Rebate forms for Quebéc-based properties for both the New Housing Rebate and NRRP Rebate need to sent to Revenu Quebéc in Montreal for processing.
If you realize that you sent your documentation to the wrong processing centre, the only action that you can take to accelerate the process is to resend your rebate documents to the correct processing centre. When your original application is received at the processing centre the examiner will note that your application is in process or has been processed and the both sets of documents will be filed.
2. Was your rebate application complete and correct?
The New Housing GST/HST Rebate and the NRRP GST/HST Rebate applications are very different in form and structure. We will discuss the major issues that the CRA encounters during processing.
Which CRA form(s) were submitted?
The forms that are required for each rebate differ by region and are listed in Table 1:
Table 1: Required FormsReaders should note that Nova Scotia and Labrador have special provincial programs pertaining to the New Home Rebate which our experts have experience in filing.
Did I use the correct date(s)?
The GST524 application form asks the applicant to provide three dates: the relevant date, the date of possession and the purchase agreement date. These three dates are very different and important part of the CRA review process.
The relevant date is probably the most confusing of the three, but in its simplest form the relevant date is the date that you start paying property tax on the property, or the date of the final closing. You have two years from this date to file your rebate application. The date of possession is particular to condominium owners only and is the date that possession was transferred to you. If you were transferred ownership of the condo at the same time that possession was transferred to you, you would record the same date as the relevant date. The final date that the GST524 asks for is the purchase agreement date. This date is pretty self-explanatory but should reflect the last date the purchase agreement was signed, if there are multiple dates.
Was the GST191WS complete and correct?
The worksheet in the GST191WS can be daunting. According to the CRA there are three primary issues that they encounter when they review the worksheet: worksheet completeness, missing information and using the incorrect GST/HST paid.
When an examiner reviews the GST191WS for completeness they are looking to see whether or not the applicant has indeed built a house – are there enough elements of the worksheet that are completed to show that a house was built, or a substantial renovation was done and are those values reasonable. Our experts use the term “white space” when referring to completeness referring to how many of the rows remain empty. From our conversations with the CRA the two most critical items that examiners look at are drywall and flooring as the values associated with these items are indicative building completion.
The GST191WS requires a significant amount of information. The most important piece of information that examiners look at in the worksheet is the Vendor’s Business Number – is there a number in the box and is it valid. While all invoices issued in Canada are required to display the vendor’s Business Number (BN), not all vendors do so. If you have omitted BN’s for some vendors and/or service providers on the worksheet, examiners may seek to verify the validity of the business. Larger ticket amounts without a corresponding BN are certain to be reviewed. An additional area that examiners have mentioned as a shortcoming is the lack of detail that applicants provide in Section B, where applicants are asked to describe their substantial renovation or major addition. Any incorrect or missing information is likely to cause a delay in your return being processed and your rebate paid.
While the rows at the top of the worksheet can appear somewhat daunting, they are in reality quite straightforward. The form was originally designed when GST/HST rates were in transition across the country. A couple of the columns aren’t valid today. GST/HST rates and the corresponding GST191WS columns are shown in Table 2.
Table 2: GST/HST Rates
Mechanical errors happen, a lot. According to the CRA the two most common errors that they encounter are math errors and filling in parts of the rebate application that don’t apply to the individual’s rebate. There really isn’t anything that can be done to correct these errors once they have been received by the CRA. If you do note the errors shortly after you submitted your rebate application, you can resend the application and it will supersede the previous application.
While not a mechanical error per se, we are seeing a significant number of properties that don’t list the legal property description – lot and plan number. As the CRA hasn’t yet moved towards serial numbers, property owners will see a delay in their rebates until they are able to provide the CRA with the legal property description.
3. What is Fair Market Value (FMV)?
The CRA defines Fair Market Value (FMV) as “the value of both the building and applicable land. It is normally the highest price that can be obtained in the real estate market between unrelated parties and should be comparable to the values of similar housing in the local real estate market. It does not include provincial land transfer taxes or any GST/HST that may be payable on the FMV.”
A property with FMV of less than $350,000 may qualify for a maximum Federal rebate of $6,300. A property with a FMV of more than $450,000 does not qualify for a Federal rebate. And properties between $350,000 and $450,000 will receive a prorated amount. Note that Provincial rebates do not use FMV to calculate the rebate amount.
For New Housing GST/HST Rebate’s the rebate calculation is straightforward. How the FMV is used to calculate the NRRP GST/HST Rebate is a little more complex. At the time of closing the builder’s solicitor will prepare a Statement of Adjustment which will calculate the HST Rebate that the purchaser must remit based upon the purchase price of the property minus the HST paid. This amount is used by the builder to calculate the rebate amount. A disconnect happens when the buyer submits their NRRP GST/HST Rebate application. The buyer needs to use the FMV of the property at closing which could be significantly higher than it was when the original purchase transaction happened. As a result your actual rebate could be lower than what you paid the builder at closing.
If you used the FMV as calculated by the builder, or even the actual price paid for the property, to file your NRRP GST/HST Rebate, your rebate application will most likely be reviewed and the FMV amount will be adjusted to reflect a more realistic value. By not providing a sensible estimate of a current FMV you can expect significant delays in receiving a rebate.
4. Help, I’m being audited
When a CRA examiner says that your rebate application is being audited, it typically means that your application has been randomly selected for further review by the CRA. Unless the examiner requires additional information from you can expect that it will take an additional 30 to 60 days for you to receive your rebate.
If the examiner does require additional information, the time required to finalize your rebate can take much longer.
5. Were the correct documents sent to the CRA with my GST/HST Rebate?
The CRA does not require applicants for the New Housing GST/HST Rebate to submit any documents other than requisite government forms. While applicants for the NRRP GST/HST Rebate need to send a copy of their rental agreement/lease indicating a minimum one year lease and the Statement of Adjustment that were generated by your lawyer at the time of closing. It should be noted that all applicants are required to retain all documents (invoices, purchase agreements, etc.) for a period of seven years after final closing.
Helping guide you through the process
The rebate process is complicated. The tax experts at My Rebates can help guide you through the process and provide a worry-free experience. Our experts oversee the entire rebate process from initial paperwork through to the CRA issuance of your rebate cheque – we don’t get paid until you’ve received your cheque.
Buying a property is all about smart decision-making. With My Rebate guiding you through the process difficult questions are easily answered and tax-related issues are easily explained. To talk with one of our tax experts call 1-647-281-5399 or visit our website at https://my-rebate.ca.