The client
A couple in St. Catharines-Niagara signed a $460,000 pre-construction condo Agreement of Purchase and Sale together in 2023, a year before occupancy — then separated while the building was still under construction.
Original agreement
$460,000, joint purchasers
St. Catharines-Niagara, signed 2023
Deposits paid to date
$46,000
10%, both spouses' funds
Paid to departing spouse
$22,000
For assigning her half-interest to the solo purchaser
Solo purchaser's income
$8,800/month
Qualifying alone for the first time
The problem
Removing one joint purchaser from a pre-construction agreement and leaving the other to close alone is, in substance, an assignment of the departing spouse's interest — and since Budget 2022's amendment to the Excise Tax Act (enacted through the Budget Implementation Act, 2022, No. 1, in force for agreements entered into after May 6, 2022), every assignment sale of newly constructed or substantially renovated housing is taxable, regardless of the assignor's reason for assigning.
What CRA's GST/HST Notice 323 changed
- ▸Before May 2022, an assignment was only taxable if the assignor intended it as a resale for profit — a personal-use or family-reason assignment was generally exempt
- ▸Since then, the exemption is gone entirely: intent no longer matters, and a marriage breakdown gets no special treatment
- ▸A portion of the deposit repaid to the assignor can be excluded from the taxable consideration, but any amount paid beyond that — here, for the interest itself — is taxable
Neither spouse had budgeted for a tax bill on what felt like dividing their own property, not selling it to a stranger.
The numbers
Once the taxable portion of the assignment was identified, funding it alongside the closing itself was straightforward arithmetic.
| Closing the solo purchase and the assignment together | Amount |
|---|---|
| Purchase price | $460,000 |
| Total down payment (20%, including the original deposit) | −$92,000 |
| Mortgage amount | $368,000 |
| Cash required at closing | Figure |
|---|---|
| Additional down payment cash (20% total less the 10% deposit already paid) | $46,000 |
| Paid to the departing spouse for her assigned interest | $22,000 |
| GST/HST on the assignment consideration (13%) | $2,860 |
| Total closing cash required | $70,860 |
| Total debt service | Figure |
|---|---|
| Payment at the qualifying rate (7.15%), 25 years | $2,612/mo |
| Property tax | $260/mo |
| Condo fees | $340/mo |
| Car loan | $220/mo |
| Total debt service | 39.0% |
39.0% qualified comfortably on the solo purchaser's own income — the mortgage itself was routine. The GST/HST on the assignment was the number that had to be found and funded separately, in cash, before closing.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the assignment's tax treatment as a question for the builder's and the couple's own lawyers to confirm, and structured the closing cash requirement only once that figure was settled.
First, confirmed with the couple's real estate lawyer that removing the departing spouse from the agreement was legally an assignment, not a simple amendment the builder could process without consequence.
Second, had the lawyer calculate the taxable consideration under Notice 323's rules, excluding the deposit-reimbursement portion but including the $22,000 paid for the interest itself, and confirmed the assignor was generally the party responsible for collecting and remitting the tax.
Third, sized the solo purchaser's closing funds to cover the additional down payment, the payment to the departing spouse, and the GST/HST together, so nothing was discovered for the first time at the lawyer's closing table.
The outcome
The purchase closed at 5.15%, the $22,000 paid to the departing spouse and the $2,860 in GST/HST were both funded in cash at closing, and total debt service settled at 39.0%.
Because this file closed at 20% down, it is uninsured; the 39.0% figure sits comfortably inside CMHC's 44% TDS maximum regardless, for reference.
What to take from this file
- 01Removing one joint purchaser from a pre-construction agreement is usually an assignment, not a simple amendment. Confirm this with the builder and a real estate lawyer before assuming otherwise.
- 02Since May 2022, every assignment sale of new housing is taxable — a marriage breakdown changes nothing about that. The old personal-use exemption no longer exists in any form.
- 03A portion of the deposit reimbursed to the assignor can be excluded from the taxable consideration, but amounts paid for the interest itself generally are not. Have the lawyer separate the two before pricing the closing.
- 04Build the GST/HST into the closing cash requirement, not the mortgage. It is a tax on the assignment, not a cost of the purchase itself, and most lenders will not finance it.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸5.15% contract rate — rates move daily; not a quote.
- ▸the $22,000 assignment consideration — this couple's own negotiated figure; every assignment's consideration depends on the parties' own agreement.
- ▸the TDS figure — this file closed at 20% down and is uninsured, so there is no CMHC ratio ceiling; shown for reference only.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.