HST is coming! Are you ready ?

 In APBS Blog

An initial brief write up on the ‘Single Sales Tax’ refer to as HST – a combination of GST and RST (PST) will start July 1, 2010 for the Province of Ontario.

A few other provinces in Canada already combined GST and RST, (also called PST) a few years way back.  This is supposed to boost the economy and make it more competitive especially for manufacturers.

To simplify administration, the single sales tax would generally use the same rules and tax base as with the federal GST.  Suffice to say, many of the services exempt from RST will be chargeable because of the merging.   Small businesses of less than $30,000.00 in revenue are exempted from HST which is in keeping with the GST regulation.  However, because of the so-called ‘Value Added tax structure’, most businesses would be reimbursed for the taxes they pay on most of their purchases. The savings of the compliance cost after the merging should save businesses over 500 million per year.

  • Currently, certain goods and services like alcohol and hotel rooms that have different rates would be changed to 8%.
  • Books, children’s clothing and footwear, car seats, car booster seats and feminine hygiene products will be exempt from the provincial portion of the single sales tax based on the point-of-sale rebate.  This treatment will also preserve retailers’ ability to claim GST ITC.
  • Exported goods would be generally free of embedded sales tax, making Ontario exports more competitive.
  • Businesses selling zero-rated goods and services would be able to claim input tax credit on their purchases, as under the federal GST, with limited exceptions.
  • Businesses selling tax-exempt goods or services would be unable to claim input tax credits, as under the federal GST rules.
  • The vendor compensation for administering PST would be eliminated.
  • Most RST vendor would have to make changes with their point-of-sale and accounting systems in order to collect the singles sales tax.  There will be a ‘small business transition credit’ (revenue of less than 2 million) of up to $1,000.00 because of the additional cost relating to this change.
  • Point-of-Sale Exemptions: this is a rebate for the exempted goods as mentioned before.
  • New housing rebate: houses of less than $400,000.00 would get 75% of the rebate, houses between $400,000.00 and $500,000.00 will get a reduced rebate.
  • Resale homes would not be subject to the single sales tax
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