Commercial Property HST Self-Assessment Calculator Ontario
Buying a commercial building, plaza or bare land in Ontario. Find out whether HST applies, whether the vendor collects it or you self-assess, what goes on line 205 and line 108, and why being registered on closing day is the difference between a six-figure cash outlay and nil.
net cash HST cost
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How the Number Is Built
| Step | Basis | Amount |
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What You Have to File and When
| Action | Form or Line | Deadline |
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Points to Settle Before Closing
What to Do Next
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Disclaimer: This calculator applies the Excise Tax Act at the Ontario rate of 13%, subsection 221(2) relieving the supplier from collecting where the recipient is a registrant, subsection 228(4) governing how the self-assessment is reported, and the all or substantially all rules in section 141 that deem commercial use of 90% or more to be 100% and 10% or less to be nil. Whether a particular supply of real property is taxable or exempt depends on the specific facts and on Schedule V of the Act, including whether a residential complex is new or substantially renovated, whether farmland qualifies for an exemption, and whether the vendor is an individual selling personal-use land. Bare trustee and nominee arrangements change who registers. This page is general information, not tax advice, and you should not close a transaction on it without advice.
Is HST Payable on a Commercial Property Purchase in Ontario
Almost always, yes. A sale of real property is a taxable supply unless it falls within a specific exemption in Schedule V, and the exemptions are narrow. A used residential complex is exempt. Personal-use land sold by an individual can be exempt. Almost everything else, including commercial buildings, plazas, industrial units, vacant commercial land and most farmland, is taxable at 13% in Ontario.
What varies is not whether the tax applies but who accounts for it, and that is where a six-figure cash difference appears at closing.
The whole page in one line. If you are registered for HST on closing day and the property is for commercial use, the vendor does not collect the tax, you report it and claim it back in the same return, and the net cash cost is nil. If you are not registered, the vendor must collect the full 13% on closing and you cannot claim it back.
Subsection 221(2) and Why the Vendor Does Not Collect
Under subsection 221(2), a supplier is not required to collect tax on a taxable sale of real property where the purchaser is registered for GST/HST. Instead the purchaser accounts for the tax directly. This is not an election and it is not optional. Where the purchaser is a registrant, the vendor is relieved of the obligation and the purchaser must self-assess.
In practice the agreement of purchase and sale will contain a certificate in which you warrant that you are registered, provide the number, and indemnify the vendor if that turns out to be wrong. Vendors and their lawyers take that certificate seriously, because if the purchaser was not in fact registered the vendor is left liable for the tax it did not collect.
Line 205 and Line 108
Subsection 228(4) sets out how the self-assessment is reported, and the mechanics depend on how the property will be used.
| Use of the Property | How the Tax Is Reported | When |
|---|---|---|
| Primarily, more than 50%, in commercial activity | Line 205 of your regular GST/HST return, with the offsetting credit on line 108 | The return for the period in which the tax became payable |
| 50% or less in commercial activity | Form GST60, filed separately, with any credit claimed on the regular return | Last day of the month after the month the tax became payable |
Line 205 is where the tax you owe on the acquisition goes. Line 108 is your input tax credit. Where the property is used entirely in commercial activity, the two are identical and cancel out. The return shows a large number in and the same large number out, and nothing is paid.
The nil result depends on both lines being completed. Reporting the tax on line 205 and forgetting the credit on line 108 produces a genuine assessment for the full amount. Claiming the credit without reporting the tax produces a reassessment when the CRA matches the transaction. Both happen, and both are avoidable.
Registered Before Closing Against Registered After
Timing is everything here, because registration cannot simply be applied retroactively to suit a closing that has already happened.
| Position on Closing Day | Cash Required at Closing | Recovery |
|---|---|---|
| Registered, number given to the vendor | Nil for HST | Self-assessed and credited in the same return |
| Not registered, registers afterwards | Full 13% paid to the vendor | Partial, through the basic tax content rules on becoming a registrant |
| Not registered, stays unregistered | Full 13% paid to the vendor | None, it becomes part of the cost of the building |
Registration takes about one business day. On a $1,500,000 commercial purchase, that one day is worth $195,000 of closing cash.
Mixed-Use Properties
A building with retail on the ground floor and apartments above is two supplies in one transaction. The residential portion, where it is a used residential complex, is exempt. The commercial portion is taxable. The purchase price has to be apportioned on a reasonable basis, and that apportionment should be stated in the agreement rather than argued about afterwards.
The input tax credit then follows the extent of commercial use rather than being all or nothing, subject to the rule that commercial use of 90% or more is treated as 100%, and use of 10% or less is treated as nil.
Bare Land and Farmland
A sale of vacant land by a corporation or in the course of a business is taxable. A sale of personal-use land by an individual can be exempt, which is why the vendor’s identity matters as much as the land itself. Farmland is normally taxable, with a specific exemption where it is sold to a related individual for personal use.
Severed lots, land with a farmhouse on it, and land held partly for personal use are the fact patterns that most often produce the wrong answer at closing. Each of those needs the specific facts reviewed rather than a general rule applied.
Change of Use and the Clawback
The credit you claim on acquisition is based on intended use. If that use changes afterwards, the Act adjusts the position.
| What Changes | Consequence |
|---|---|
| Commercial use increases | Additional input tax credit available |
| Commercial use decreases | Part of the credit is recaptured |
| Commercial use falls to 10% or less | Deemed sale, remit the basic tax content |
| Property converted to residential rental | Self-supply rules apply, tax on fair market value |
The most common trigger is a buyer who acquires a commercial building intending to lease it out, claims the full credit, and then converts part of it to long-term residential rental. Long-term residential rent is an exempt supply, so that portion of the credit has to come back.
What to Do Before Closing
- Register the buying entity for GST/HST with an effective date on or before closing.
- Confirm which entity is actually acquiring title. A nominee or bare trustee does not register. The beneficial owner does.
- Give the number to the vendor’s lawyer with the certificate and indemnity in the agreement.
- Agree the price apportionment in writing where the property is mixed use.
- Confirm your reporting period, because it sets when the self-assessment is reported.
- Diarise the return and make sure both line 205 and line 108 are completed.
What the Calculator Does Not Cover
- New or substantially renovated residential property, which is taxable and has its own rebate rules
- The self-supply rules on converting commercial property to residential rental
- Land transfer tax, which is separate and is payable in every case
- Assignments of agreements and options, which have their own treatment
- Non-resident vendors, where section 116 clearance also applies
- Public service bodies and charities, which use different rules and rebates
Register first, close second. The registration itself takes about a business day and the effective date has to be on or before closing. We handle the registration, the reporting period election, the certificate wording for your lawyer and the return that carries the self-assessment. Full detail is on our GST/HST registration page.
Frequently Asked Questions
Common questions from buyers of Ontario commercial real estate.
Related Calculators and Guides
More tools for Ontario corporations and property buyers.
Closing Soon? Register First.
Send us the closing date and the entity taking title. We register it for HST with an effective date before closing, give your lawyer the certificate wording, set the reporting period, and file the return that carries the self-assessment and the offsetting credit.