Life after EOA and Taxes
For some federal providers, End of Operating Agreements (EOA) may have a significant impact on their GST/HST status. Certain kinds of non-profit housing providers are designated a “municipality” for the purposes of GST/HST. Housing providers with this designation are able to claim the public services body rebate (PSB Rebate) for GST/HST paid on expenses related to their rent-geared-to-income (RGI) units.
Depending on the number of RGI units in a housing provider’s portfolio, the savings from the PSB Rebate are large and the financial impact of losing the designation could be significant.
To get the rebate, a housing provider must meet these conditions:
- be a non-profit within the meaning of the Act
- provide long term residential accommodation to low and moderate income households
- receive “government funding” to provide RGI housing
At EOA, non-profit housing providers left without government funding will lose their municipal designation. For providers that still receive some government funding a thorough financial and tax review will be necessary.
In order to prepare for the GST/HST implications of End of Operating Agreements, housing providers should:
- gather operating and funding agreements
- clarify which projects are designated a municipality for the purpose of GST/HST
- analyze market/RGI mix by program and portfolio
- develop a business plan for EOA taking GST/HST implications into account
Housing providers that have not already done so should consult a qualified tax professional to discuss GST/HST and the end of funding agreements. For more information, ONPHA members can refer to the InfoON Internal Subsidies and End of Operating Agreements.