The Ontario government is set to eliminate the provincial portion of the Harmonized Sales Tax (HST) on new rental housing. Finance Minister Peter Bethlenfalvy and Housing Minister Paul Calandra revealed this move a day before the Progressive Conservatives release their fall economic statement.

Bethlenfalvy highlighted the urgency of addressing Ontario’s housing crisis, acknowledging the unprecedented growth the province is experiencing. The government’s plan involves scrapping the eight per cent provincial part of the HST on “qualifying new purpose-built rental housing.” This category includes apartment buildings, student housing, and senior residences designed for long-term stays.

To be eligible for the enhanced HST New Residential Rental Property Rebate, these buildings must meet specific criteria. They should comprise at least four private apartment units or 10 private rooms or suites, with a requirement that at least 90% of these units are designated for long-term rental. These criteria align with the federal Goods and Services Tax (GST) rebate qualifications.

Bethlenfalvy illustrated the impact, mentioning that a two-bedroom rental unit valued at $500,000 would benefit from a $40,000 provincial tax relief under this rebate. When combined with the federal rebate, this totals $65,000 in tax relief, offering a compelling incentive for encouraging rental housing construction.

Last month, the federal government proposed a bill to eliminate additional fees on the construction of new rental apartment buildings. When paired with the provincial rebate, this results in a 13% total tax rebate for new construction.