If you are buying a newly constructed or substantially renovated home, you need to consider the impact of the HST, as this new tax and associated transitional rules could have a significant impact on your closing costs. Click here to read more.
As a board member or property manager, you NEED to be aware that the federal and provincial governments plan to merge GST and PST to create a single tax called the Harmonized Sales Tax (HST) and that it is scheduled to come into effect on July 1, 2010. It is critically important that boards understand and appreciate that HST will have an enormous impact on condominium corporations. Goods and services currently exempt from GST will be subject to HST and goods and services currently exempt from PST will be subject to HST. The bottom line: condominium corporations must budget for a 7-8% increase in prices for most goods and services under the new HST regime. Many budgets for the period after HST is scheduled to come into effect do not account for HST. This will inevitably lead to a budget deficit requiring corrective action by the board, whether in the form of a significant increase in common expenses or a special assessment. When it comes time to prepare the next budget, remember to account for HST.
HST may also affect your condominium corporation's status certificates. In order to provide proper disclosure to prospective purchasers, a condominium corporation may have to note in the status certificate that the implementation of HST will lead to an increase in common expenses in the range of 7-8%. Whether a particular condominium corporation needs to note HST in its status certificates depends on the particular circumstances of each condominium corporation. Unfortunately, many prospective purchasers of condominium units are shocked and appalled when I advise that common expenses will likely increase by 7-8% after July 1, 2010.
Now is the time to take proactive action to ensure your condominium corporation is ready for July 1, 2010. Boards should consider holding an information meeting to advise unit owners whether HST will result in an increase to common expenses and the expected amount of the increase. At the very least, boards should send a letter to unit owners outlining the effect that HST will have on common expenses and the actions taken to date by the board to prepare for the implementation of HST. In my experience, people react more positively to a problem when they know its coming in advance and the reasons behind it.
What steps has your condominium corporation taken to prepare for HST?