HST is painful for condos: The Proof (Part 1)
One overlooked but painful way in which the HST adversely affects condominium corporations is the fact that the maximum fee to issue a status certificate is fixed by law at $100 taxes included.
This fixed fee is set out in section 18(2) of O. Reg. 48/01 under the Condominium Act, 1998 which provides as follows:
The fee that a corporation may charge for providing a status certificate, including all material that is required to be included in it, shall not exceed $100, inclusive of all applicable taxes.
So how does this shake down in terms of dollars and cents?
A status certificate issued on June 30, 2010 that was subject to 5% GST would net the condo corporation $95.24.
That same certificate issued on or after July 1, 2010 that is now subject to 13% HST would net the condo corporation about $88.50, a difference of $6.74 from before July 1.
There’s no question that the cost of preparing a status certificate has not become less expensive, so it’s equally clear that condo corporations are obliged to suck up the difference. This can be painful for larger corporations that issue many dozen status certificates each year.
This regulation has not been amended to account for the introduction of the HST and its operation is unfair. A change is required immediately unless the Ministry of Finance wants to create another cockameme rebate program, this time to provide every condominium corporation in Ontario with a small rebate to make up a small fraction of the actual loss incurred on each and every status certificate issued.
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My suggestion: In section 18(2) of O.Reg. 48/01 (above), replace the word "inclusive" with "exclusive." The change could be made in as little as 30 days if people in power put their minds to it. Seeing as how this amendment would actually increase tax revenue, it's astonishing why this has not already been done.
That aside, we’re almost two months into life after HST. How’s it working out for your condo corporation so far?
In principle, all services rendered by condo corps are now subjected to a 13% tax charge because of the new HST tax implementation.
However, here is the good news.
Most corps. are presently tax exempted, and pay no tax for their revenue under the classification of "NOT FOR PROFIT ORGANIZATION" pursuant to Income Tax Act.
Going paperless is the norm of the day. Many condo corporations have started to issue online status certificates like statuscertificate.com
The funny part is that some of these services are even more expensive than traditional paper versions. Why can't they just issue certificates electronically for a fraction of cost of doing it manually.
Your suggestion of $100 plus taxes makes all the sense.