Indirect tax issues affecting cash flow in the real estate sector

Jul 17, 2020
Indirect tax Digital assets Real estate Regulatory compliance

The pandemic and near shutdown of local, national and global economies have presented cash flow challenges for businesses across sectors. This white paper provides an overview of several goods and services tax and harmonized sales tax (GST/HST) and Quebec sales tax (QST) issues that affect the cash flow of businesses in the real estate sector, including construction companies, developers of commercial and residential properties for sale, as well as owners and managers of commercial and residential rental properties. We also discuss particular opportunities in this sector relating to public service bodies, including charities and nonprofit organisations.

The following topics are discussed in the white paper:

  • Purchases by real estate businesses engaged in taxable activities
  • Purchases by developers and owners of residential rental properties
  • Special considerations for public service bodies, including charities and nonprofit organisations
  • Special organisational structures and mixed-use properties

Please reference insights shared about general indirect tax strategies to generate or preserve cash flow during these difficult times. The federal government and some provincial governments have extended the remittance deadlines for GST/HST, QST, PST, and other indirect taxes.

In addition, we have identified numerous ideas beyond tax considerations; our clients are availing themselves of helpful guidance in the following areas:

  • Federal, provincial and local stimulus
  • Grants and other incentives programs, such as the Emergency Commercial Rent Assistance Program
  • Corporate finance and borrowing options
  • Restructuring and insolvency

Please visit the RSM Canada COVID-19 Resource Centre for more on cash flow and liquidity thoughts and strategies.

How RSM can help?

RSM’s indirect tax team has the knowledge and experience in the real estate sector to assist you to reduce GST/HST and QST costs and compliance risks.

Our indirect tax professionals can assist you by conducting GST/HST and QST diagnostic reviews. These reviews are intended to identify recoveries of past GST/HST and QST overpayments or missed ITCs, ITRs and rebates as well as opportunities to reduce future GST/HST-related costs. In addition, the reviews can be structured to identify compliance issues, so that corrective action may be taken.

Further, RSM’s indirect tax team can advise you on proposed transactions and organisational changes, and participate in due diligence reviews.

Our approach is integrated and collaborative, as we work with you and our colleagues in assurance and income tax to ensure that our conclusions and recommendations take into account other accounting, systems and tax issues.

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