Deposit or instalment: the contract sets the HST clock
HST is not automatically due the day a client's payment lands. A true deposit, money held as security and applied against the price later, is not treated as consideration until you apply it, so no tax is collectible on receipt. A scheduled stage payment is different: tax is due on the earlier of the day it becomes due under the contract and the day it is paid. Most renovation agreements use the word deposit for everything, but the CRA reads the substance of the payment schedule, and so do we, before the first HST return goes out.
The stakes run both directions. Remit on money that was legally still a deposit and you have financed the CRA with cash you might have to refund on a cancelled project. Miss the due date on an instalment and interest accrues quietly across every open project. The main positions in one place:
| Payment event | When the 13% is due |
|---|---|
| True deposit taken at signing, held as security | Not on receipt; tax follows when the deposit is applied against an invoice |
| Stage payment due at demolition under the schedule | The earlier of the contractual due date and the day the client pays |
| Stage invoice issued before the money arrives | Collectible once the invoice is issued |
| Client walks away, deposit forfeited | The forfeited amount is treated as HST-included, so 13/113 of it is tax you remit |
Design retainers ride their own line: HST on the design fee follows the design invoice, whether or not the client proceeds to construction, which is one more reason those fees belong on a separate revenue line.
The rebate file your invoices become
The GST/HST New Housing Rebate reaches renovation clients only through the substantial-renovation door: all or substantially all of the interior of the existing house, roughly a 90% test that sets aside the foundation, exterior walls, supporting walls, floors, roof and staircases, must be removed or replaced. A kitchen and a bathroom on their own almost never get there; a full-gut design-build project can. The homeowner claims it on Form GST191 with the construction summary worksheet and the Ontario rebate schedule, within two years of substantial completion, and the evidence behind every line of that worksheet is your invoices.
Two smaller credits come up in your showroom constantly. The Home Accessibility Tax Credit returns 15% of up to $20,000 of qualifying work, curbless showers, grab bars, widened doorways, for seniors and clients eligible for the disability tax credit. The Multigenerational Home Renovation Tax Credit returns 15% of up to $50,000 spent creating a secondary suite for a qualifying senior or disabled family member. A renovator whose invoices are itemized, dated and carry a valid HST number hands clients a claim-ready file, and that earns referrals no ad spend buys.
Trades on the file: slips out, credits back
A design-to-install firm earning more than half its income from construction files a T5018 for every plumber, electrician, tile setter and countertop installer paid $500 or more in the reporting period, amounts HST-included, due six months after the period ends. The CRA matches those slips against what your trades declared, so the payables ledger has to be complete before the slips are cut. On the other side of the same invoices sit your input tax credits: 13% recovered on trade and supplier bills, defensible only when each invoice carries the supplier's valid registration number. Returns heavy with ITCs draw pre-assessment review letters, and a clean invoice trail answers them in a day instead of a month.
A T2 that believes the punch list
The corporate return reports what was earned by year-end, meaning stages signed off, not amounts invoiced or collected, with unapplied deposits sitting where they belong, off the income line. That is only possible when the books already track revenue by stage, which is why our Corporate Tax Filing works best fed by End-to-End Accounting rather than a January shoebox. The T2 is due six months after year-end, the balance three months after for a small CCPC, and HST runs its own cycle in between; we keep the calendar so no filing lands mid-install.
When a letter does arrive, an HST review, a T5018 mismatch, a question about a forfeited deposit, CRA Audit and Review Support answers it with the contract and the ledger in hand. We file for renovation firms across Mississauga and the GTA, quoted in writing after a free 15-minute discovery call.
Source: CRA — Form GST191, GST/HST New Housing Rebate Application for Owner-Built Houses.
