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Get My Free Estimate →Since 7 May 2022 every assignment of a new-housing purchase agreement is taxable for GST/HST. The deposit you get back is excluded from the taxable amount only if the assignment agreement identifies it in writing. CRA Notice 323 sets consideration as A minus B, where B is the written-out deposit reimbursement, and states that in any other case B is zero. On a $120,000 deposit that difference is $15,600 of HST. CRA Info Sheet GI-120 still describes the old intention-based test and carries a banner saying it has not been updated — Notice 323 governs.
There is a single sentence you can put in an assignment agreement that changes the tax bill by tens of thousands of dollars. Leave it out and the CRA treats your returned deposit as taxable consideration. Put it in and it is excluded. That is the whole of it, and it is the most expensive drafting point in Ontario pre-construction right now.
The rule
Since 7 May 2022, every assignment of an agreement of purchase and sale for new or substantially renovated housing is a taxable supply for GST/HST purposes. Not sometimes. Not depending on intent. CRA GST/HST Notice 323 puts it as a deeming rule: the assignment “is deemed to be a taxable supply, by way of sale, of real property”, and this applies to any assignment made after 6 May 2022.
Before that date, whether an assignment was taxable turned on whether the original purchaser had entered the agreement with the intention of living in the home or of flipping it. That test is gone. Everything is taxable now.
The deposit exclusion, and its condition
Notice 323 sets the taxable consideration by a formula — A minus B:
| Term | What it is |
|---|---|
| A | The consideration for the assignment as otherwise determined for GST/HST purposes. |
| B | If the assignment agreement indicates in writing that a part of the consideration is attributable to the reimbursement of a deposit paid under the purchase agreement, that part. In any other case, zero. |
“In any other case, zero.” If the assignment agreement is silent on the deposit, B is nil and the entire amount the assignee pays — the deposit reimbursement included — is taxable consideration. The deposit was never profit. It was your own money coming back. But if the agreement does not say so in writing, the CRA does not have to infer it.
What that costs
Take an assignment where the original purchaser paid $120,000 in deposits and is assigning at a $60,000 premium, so the assignee pays $180,000 to the assignor. Ontario HST at 13 per cent.
| Deposit identified in writing | Silent on the deposit | |
|---|---|---|
| Taxable consideration | $60,000 | $180,000 |
| HST at 13 per cent | $7,800 | $23,400 |
| Difference | — | $15,600 |
Those figures are arithmetic on the rule, using a hypothetical deposit and premium. They are not a quote and they are not your numbers. The point is the size of the gap, not the specific dollars.
Why so many pages have this wrong
CRA Info Sheet GI-120 is still online, still indexed, and still describes the pre-2022 intention-based test. The CRA has put a banner on it:
“Effective May 7, 2022, all assignment sales in respect of newly constructed or substantially renovated residential housing are taxable for GST/HST purposes. This publication will be updated to reflect this legislative change.”
It directs readers to Notice 323. Four years on, GI-120 has still not been rewritten. If you find a page explaining that assignment tax depends on whether you originally intended to occupy, it is almost certainly working from GI-120. Notice 323 governs.
The interaction nobody is writing about
Assignments have collided with the new-home rebate windows, and the collision is where the money is.
The Ontario Enhanced New Housing Rebate requires an agreement of purchase and sale entered into between 1 April 2026 and 31 March 2027. The federal First-Time Home Buyers’ GST Rebate requires one entered into on or after 20 March 2025. Both require the home to be the claimant’s primary place of residence. An assignee taking over a 2022 agreement is not the party who entered into the original agreement, and the date that matters for the rebate windows is not the date of the assignment. Before anyone budgets a rebate into an assignment deal, that question needs a specific answer from an accountant on the specific facts — not an assumption.
I am not going to tell you how that resolves. It turns on the interaction between the rebate provisions and the assignment rules on facts I cannot see, and getting it wrong costs more than the accountant does. What I will say is that if an assignment is being marketed to you with a rebate figure baked into the numbers, ask who verified it and against what.
Practical points before you sign either side of an assignment
- Say it in writing. The assignment agreement should identify, explicitly, the portion of the consideration attributable to reimbursement of the deposit paid under the original purchase agreement.
- Check the builder’s consent terms. Most agreements require the builder’s written consent to an assignment and charge a fee for it. Some prohibit assignment before a stated percentage of the project has sold.
- Confirm who is remitting. The assignor is generally the supplier for GST/HST purposes on the assignment. Do not assume the builder or the lawyer is handling it.
- Get the original agreement, all schedules and all amendments before you price anything. An assignment is a purchase of someone else’s contract, including its problems.
Looking at an assignment in Etobicoke or on The Queensway?
Assignments are the most document-heavy transaction in this market and the one where the numbers on the marketing sheet are least likely to be the numbers at the end. Send me the project and the paperwork and I will tell you what I see, and where you need the accountant rather than me.
connect@jatindua.com · 437-987-1925 · Book a free consultation
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Frequently asked questions
Is GST or HST payable on every assignment?
On assignments of new or substantially renovated housing, yes. Since 7 May 2022 the supply is deemed taxable regardless of the assignor’s original intention. The old test, which asked whether the original purchaser meant to occupy the home, no longer applies.
Is my deposit taxed when I assign?
Only if the assignment agreement does not say otherwise. CRA Notice 323 excludes the part of the consideration attributable to reimbursement of the deposit, but only where the assignment agreement indicates that in writing. Where the agreement is silent, the exclusion is zero and the full amount is taxable.
How much does that cost in practice?
On a $120,000 deposit at Ontario’s 13 per cent HST, it is $15,600. That is arithmetic on the rule using a hypothetical deposit, not a quote for your deal, but the order of magnitude is the point.
Why do so many articles say assignment tax depends on intention?
Because they are working from CRA Info Sheet GI-120, which is still published and still describes the pre-2022 rules. CRA has put a banner on it confirming it has not been updated and directing readers to Notice 323. Notice 323 governs.
Can I claim the new-home HST rebates on an assignment?
That depends on facts specific to your deal, including who entered into which agreement and when, and whether the home will be your primary place of residence. The rebate windows run from the agreement of purchase and sale, and an assignee is not the party who signed the original one. Get a specific answer from an accountant before you budget a rebate into an assignment.
Who remits the tax?
Generally the assignor, as the supplier of the assignment. Do not assume the builder or a lawyer is handling it as part of the closing. Confirm it explicitly.
Do I need the builder’s consent to assign?
Almost always. Most builder agreements require written consent, charge a fee for it, and often restrict assignment until a proportion of the project has sold. Read the assignment clause in the original agreement before you market anything.
Related reading
- New-home HST relief: the eligibility checker
- Cancelled pre-construction projects: what happens to your deposit
- Occupancy versus final closing when the market moved against you
Sources
Every figure on this page traces to one of these, and each was read on 30 August 2026. Primary sources only — statute, regulation, and the government or agency that administers the rule. Where I could not verify something from a primary source, the page says so instead of guessing.
- GST/HST Notice 323 — Proposed GST/HST Treatment of Assignment Sales. Canada Revenue Agency. Applies to assignments made after 6 May 2022. Sets the A minus B formula and the written-identification condition for excluding a deposit reimbursement. Accessed 30 August 2026.
- GST/HST Info Sheet GI-120 — Assignment of a Purchase and Sale Agreement. Canada Revenue Agency. Carries a banner confirming it has not been updated for the 7 May 2022 change and directing readers to Notice 323. Accessed 30 August 2026.
- Ontario Enhanced New Housing Rebate — what is the rebate. Canada Revenue Agency. Agreement of purchase and sale must be entered into on or after 1 April 2026 and on or before 31 March 2027. Accessed 30 August 2026.
- First-Time Home Buyers’ GST/HST Rebate — who can apply. Canada Revenue Agency. Sets the four-calendar-year first-time buyer test, the once-in-a-lifetime limit, and the agreement date window beginning 20 March 2025. Accessed 30 August 2026.
- GST/HST Notice 346 — Ontario Enhanced New Housing Rebate. Canada Revenue Agency. The Ontario rebate is administered by the CRA; maximum $80,000 of the 8 per cent provincial part of the HST. Accessed 30 August 2026.
- 2026 Ontario Budget — HST relief on new homes. Government of Ontario. Describes the combined federal and provincial relief of up to $130,000 on a qualifying new home up to $1 million. Accessed 30 August 2026.
About the author — Jatin Dua, Etobicoke real estate agent
I’m the Broker of Record at RE/MAX Quantum Realty, 799 The Queensway in Etobicoke. I write these pages the same way I work a file: read the primary source, quote it, date it, and say plainly where the source is silent or where two sources disagree. If a figure on this page has no citation beside it, that is a mistake and I want to hear about it.
I work with buyers, sellers, renters and investors across Etobicoke, Mimico, Humber Bay Shores, New Toronto, Long Branch, Alderwood and Stonegate–Queensway. connect@jatindua.com or 437-987-1925.