A developer in Alberta sells a new condominium unit for $400,000 to a buyer who will live in it and who is not a first-time home buyer. The buyer paid $20,000 of GST. Under s. 254(2) of the Excise Tax Act, what is the GST new housing rebate?
Correct Answer
A) $3,150
Under s. 254(2), the base amount is the lesser of $6,300 and 36% of the tax paid: 36% × $20,000 = $7,200, so the base is $6,300. Because the price is more than $350,000 but less than $450,000, the rebate is phased out: $6,300 × ($450,000 − $400,000) ÷ $100,000 = $3,150.
Why This Is the Correct Answer
The base is the lesser of $6,300 and 36% × $20,000 = $7,200, so $6,300. The price of $400,000 is in the phase-out range, so the rebate is $6,300 × ($450,000 − $400,000) ÷ $100,000 = $3,150.
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