Condo Fees and HST

We get questions from time to time about HST on condominium fees. Here’s a brief primer respecting HST and condominium fees.

First of all, there is no HST payable / collectible on condominium fees for residential units (or parking or storage units that are associated with residential units). So, condominium corporations don’t levy HST on their condo fees for those units.

HST is collectible on condominium fees for non-residential units (as well as parking and storage units that are not associated with residential units).  NOTE:  There can be much room for debate about whether or not a particular parking or storage unit is associated with a residential unit. This can depend upon the particular facts and is something to be assessed on a case-by-case basis.]

Note as well that a condominium corporation is only required to register for HST collection and remittance when the total annual “HST taxable revenues” of the condominium corporation reach the $50,000 threshold (applicable to not-for-profit organizations). SO: As long as the condominium fees (for non-residential units), plus any other “HST taxable revenues”, don’t reach this threshold, the condominium corporation is not required to collect or remit HST (and to register for such).

A condominium corporation may nevertheless decide to register for HST collection and remittance (in relation to non-residential units) even if the $50,000 threshold is not reached. (More on this below.)

In terms of Input Tax Credits: The condominium corporation that has registered for HST remittance can of course claim input tax credits for HST spent by the condominium corporation. Condominiums pay HST on most goods and services that they purchase, although some goods and services are exempt from HST (including municipal water charges and insurance premiums – although the 8% PST is payable on insurance premiums).

In a “mixed use” condominium (containing some residential and some non-residential units), the input tax credits would be for a percentage of the HST spent by the condominium corporation, equal to the percentage common expense contributions for the non-residential units. ALSO: Any claimed input tax credits should of course be applied only to the fees for the non-residential units… effectively serving to reduce the NET HST payable by those units.

Registered business owners of the non-residential units (ie. owners who are registered for HST remittance) can of course claim their own input tax credits for the NET HST that they pay to the condominium corporation (on their condo fees).

The disadvantage (of registering for HST remittance) is that collecting and remitting HST involves considerable additional accounting (particularly in a mixed-use condominium). However, the advantage is as follows: This allows the condominium corporation and/or the registered business owners who pay HST on their fees to “claim back” the HST (that they have spent) in the form of input tax credits. For this reason, some condominiums may decide that it is advantageous (for the condominium corporation and for the registered business owners of non-residential units) for the condominium corporation to register for HST remittance, even if the corporation’s total annual “HST Taxable Revenues” are less than $50,000.

Stay tuned to Condo Law News to keep up to date on the latest developments on condominium law!