Harmonized Sales Tax

As we all know by now, Ontario implemented the harmonized sales tax (HST) on July 1, 2010. What we don’t all know is how the transitional rules will affect various industries and what this means going forward.

At SPH, we stay on top of the filing requirements so you don’t have to.

What does HST mean to most businesses?

Businesses who are registered for HST can now claim this additional 8% as an input tax credit on most expenditures.

There are specific transitional rules and changes from the GST rules onward that require careful consideration.

The rules pertaining to sales and services with consumers or businesses in another province have changed effective May 1, 2010. These rules, referred to as the place of supply rules, determine the tax you charge when selling goods or providing services to a customer in another province.

What does HST mean to non-profit and charitable organizations

Non-profit and charitable organizations cannot claim input tax credits on most of their purchases and because the HST base is broader than that for RST, the harmonization will result in a substantial increase the costs borne by these organizations.

Many supplies provided by not-for-profit organizations are exempt under the GST. Under the HST system, these supplies would remain exempt.

Ontario will provide rebates of the provincial component of HST to charities, qualifying non-profit organizations, hospitals, universities, colleges and municipalities to be fiscally neutral relative to the RST currently paid by these entities.
The rebate amounts are as follows:

Ontario HST 8%
Rebate Rates
Existing GST
Rebate Rates
Municipalities 78% 100%
Universities and colleges 78% 67%
Schools 93% 68%
Hospitals 87% 83%
Charities and not-for-profit organizations 82% 50%

Contact us to discuss your HST questions and concerns.

Randy Post, CA

Joel Rumney, CA