READER QUESTION: New housing GST Rebate

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David:
A reader has a question
FRANK O'BRIEN
TEL: 604-885-6733
[email protected] 
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From: "F. O'Brien" <[email protected]>
Date: Fri, 19 Mar 2004 08:53:31 -0800
To: <[email protected]>
Subject: FW: New housing GST Rebate
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From: "Tammy Noel" <[email protected]>
Date: Thu, 18 Mar 2004 19:21:08 -0800
To: <[email protected]>
Subject: New housing GST Rebate
I was reading your article on the GST New Home Rebate, and would like to ask
your opinion on how the Rebate should be calculated for our new home.
 
We purchased a home that stated in the contract that the G.S.T. was included
in the purchase price, and that we would sign the form to allow the builder
to claim the rebate from the government on our behalf, and they in turn
would credit us the equivalent amount of the rebate on the statement of
adjustments.
 
When I asked the Lawyer for the calculation for the rebate, this is how they
told me it was figured out:
 
Purchase price including G.S.T. = 226,620 / 1.0448 = 216,902.76 purchase
price without G.S.T.
                                                         7%  G.S.T.=
216,902.76 x .07 = 15,183.19
                                          G.S.T. rebate at 36% =   15,183.19
x .36 = 5,465.95
 
                                            Final Purchase Price  =
216,902.76
                                                                           +
15,183.19 
                   
-  5,465.95 
                   
226,620.00         
 
Now I have a different calculation, which they tell me is wrong, because to
me, the way they calculate the rebate, they have me paying the full 7% and
they only end up having to remit the 4.5% and they get the full benefit of
the rebate instead of us.
 
My calculation is as follows:
 
Purchase price including G.S.T. = 226,620 / 1.7 = 211,794.39 purchase price
without G.S.T.
                                                         7%  G.S.T.=
211,794.39 x .07 = 14,825.61
                                          G.S.T. rebate at 36% =
14,825.61x .36 = 5,337.22
 
                                            Final Purchase Price  =
211,794.39 
                                                                           +
14,825.61
                   
-  5,337.22
                   
221,282.78         
 
Which means there is a difference of in the price we pay and the price I
think we should pay of exactly the Rebate amount that I calculate of
(5337.22).
 
Can you please give me your opinion of which way the rebate should be
calculated.
 
Thank you
Tammy Noel
 
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