Is HST payable on an assignment sale of a pre-construction home in Ontario?

Yes, in most cases. The Canada Revenue Agency has clarified that assignment sales of pre-construction residential properties are generally subject to HST under the federal Excise Tax Act. The CRA's position is that the assignor is making a taxable supply of the contractual rights, and HST applies on the profit (the amount received over and above the deposits paid to the builder), or potentially on the full amount received, depending on the structure.

In 2022, the federal government introduced rules specifically requiring HST to be collected on assignment sales of newly constructed residential properties. The assignor may be required to register for HST, collect it, and remit it to the CRA, even if they are an individual who only assigned one contract. Failure to comply can result in the CRA assessing HST, interest, and penalties after the fact.

The new home HST rebate available to the original buyer may not transfer seamlessly on an assignment, and the ultimate purchaser's eligibility for the rebate depends on their intended use of the property. The tax treatment of assignment sales is complex and has been an enforcement priority for the CRA in Ontario — legal and tax advice is strongly recommended before entering or closing any assignment transaction.