Prime Minister Mark Carney Eliminates GST on Domestic Mass Timber Rental Construction

OTTAWA — Prime Minister Mark Carney and Minister of Housing Sean Fraser announced on Monday an enhanced federal tax measure eliminating 100 percent of the Goods and Services Tax (GST) on capital construction costs for all new purpose-built multi-family rental developments that utilize certified Canadian-manufactured mass timber products for at least 60 percent of their structural superstructure.

The fiscal directive, implemented through Department of Finance regulatory orders, expands upon the general rental GST rebate by providing accelerated capital cost allowance (CCA) write-offs for builders utilizing engineered wood products such as cross-laminated timber (CLT), nail-laminated timber, and glulam columns.

Driving Faster Construction and Domestic Forestry Value Federal housing models project that the targeted tax incentive will reduce upfront capital construction costs for tall-wood rental towers by approximately 8 to 12 percent, incentivizing private and non-profit developers to break ground on an estimated 45,000 mass timber apartment units across Canadian cities over the next four years.

"Canada is blessed with the world's finest sustainable forests and a world-class engineered wood manufacturing sector," Prime Minister Carney said during an announcement at a mass timber fabrication plant in Ottawa. "By eliminating the GST on mass timber apartment buildings, we are achieving a double economic dividend: speeding up the construction of high-quality, beautiful rental homes that Canadians can afford, while driving billions of dollars into our forestry and manufacturing communities in British Columbia, Quebec, and Northern Ontario."

Accelerated Permitting and Pre-Approved Architectural Catalogues Minister Sean Fraser noted that Canada Mortgage and Housing Corporation (CMHC) is pairing the tax rebate with standardized, pre-approved architectural designs for 6- to 18-storey mass timber buildings, enabling municipal planning departments to issue building permits in as little as 30 business days.

Canadian wood manufacturing associations, provincial forestry ministers, and urban housing advocates expressed strong support for the policy, noting that factory-built mass timber components reduce on-site construction timelines by up to four months per building.