It depends on one question CRA asks about the ORIGINAL purchase, not the assignment: why did you sign the contract with the builder in the first place?
Short answer
Per CRA's GI-120, whether the assignment is taxable turns on whether the assignor is a "builder" for GST/HST purposes, which turns on their primary purpose when they first signed with the original builder: personal use, or resale. Where the assignment is taxable, GST/HST applies to the full price paid for the assignor's interest — including any amount recovering the original deposit — and the assignee generally pays it, to the assignor directly, on top of what they separately owe the original builder for the unit itself.
CRA looks at "all of the relevant factors" surrounding the original purchase agreement to determine primary purpose, including whether the person offered to sell before or during construction, financed with a short-term or open mortgage rather than a long-term closed one, was financing beyond their means while relying on a rising market, or had a stated intention to occupy that the circumstances did not support. GI-120's own worked examples make the line concrete: three roommates who bought a one-bedroom unit they could never realistically all live in were found to be builders when they assigned it — "it would not be practical for the three individuals to live in the condo unit together." A couple who genuinely intended to occupy a new house but sold their interest after a parent moved in and the space no longer fit was not — their sale of the interest was exempt.
GI-120's own example is direct: a first purchaser pays a $10,000 deposit, then assigns for $15,000. If the sale of that interest is taxable, "tax applies to the full $15,000 ... even if the assignment agreement identifies that the $10,000 is a recovery of the deposit." The builder's own consent fee for permitting the assignment is separately "generally subject to the GST/HST" as well.
Where there are effectively two builders in the chain — the original builder and the assignor — "an assignee purchaser would generally have to pay the GST/HST to Builder A for the purchase of the new house and to the first purchaser for the purchase of the interest in the new house." Ontario's HST rate is confirmed at 13% on CRA's own rate table. The assignor, having sold under a taxable transaction, is not eligible for the new-housing rebate on the unit; the assignee, if an individual, may separately qualify once the deal closes.
Treadstone Law's own framing is accurate: this "is one of the costliest mistakes" clients make on an assignment, because the fact-specific test means the same type of deal can produce opposite results depending on the assignor's original intent. Confirm the rate has not changed and get a lawyer or accountant to confirm the primary-purpose analysis in writing before a price is set — do not assume either "HST applies" or "it doesn't" as a blanket rule.
See what an assignee is actually acquiring in what does an assignment buyer actually buy, and the pre-construction assignment guide.
Confirm the HST position in writing before the assignment price is set, not after it closes.
