Humber/Ontario Real Estate Course 2 Exam Practice

When dealing with HST in a sale agreement, what effect does including the phrase mean?

1. No HST is applicable.

2. HST risk bears on buyer’s agent.

3. Buyer is not liable for HST.

4. Seller bears HST risk.

5. Offer nullifies if HST is applicable.

6. Mitigates HST risks for both sides.

The correct answer is: Seller bears HST risk.

When the phrase "HST included" is included in a sale agreement, it means that the Seller bears the risk associated with the Harmonized Sales Tax (HST). This phrase indicates that the selling price agreed upon by the parties includes the HST amount, and the Seller will be responsible for remitting that HST to the government. This helps clarify the financial responsibility for the HST and prevents any confusion or disputes related to the tax payment. Option A is incorrect because stating "HST included" does not mean that no HST is applicable; it simply specifies who is responsible for it. Option B is incorrect as it refers to the buyer's agent bearing the HST risk, which is not typically the case in this scenario. Option C is incorrect, as it states that the buyer is not liable for HST, which is not the implication of including the phrase in the sale agreement. Option E is incorrect as the offer does not automatically nullify if HST is applicable; instead, it clarifies the party responsible for the tax. Option F is also incorrect as it states that the phrase mitigates HST risks for both sides, whereas in reality, it only specifies the responsibility for the tax.