THE NEW HST

The Harmonized Sales Tax or HST is on for British Columbia and Ontario. British Columbia And Ontario will harmonize their provincial sales tax (PST) with the Federal goods and services tax (GST) effective July 1, 2010. The current provincial sales tax (PST) rate in BC is 7%, which, when combined with the goods and services tax (GST) results in a harmonized sales tax (HST) rate of 12%. The current provincial sales tax (PST) rate in Ontario is 8%, which, when combined with the goods and services tax (GST) results in a harmonized sales tax (HST) rate of 13%. The initialization of this will be costly and result in extra time spent understanding the rules, however in the long run it should benefit, more than harm, as it eliminates an entire level of bureaucracy, which is always a good thing! One tax means only one reporting, no longer 2! There will be a slight increased cost to consumers to start, but because this is a consumption tax, those who spend the most will pay the most. Those with low incomes will be affected the least, because they spend the least, and a higher proportion of items purchased by low-income people are not subject to the harmonized sales tax (HST), such as basic groceries. The new harmonized sales tax (HST) allows business owners to claim HST paid as input tax credits which could allow for less tax paid to CRA. There are also changes in the goods and services tax (GST) Benefits paid to lower income families, especially in Ontario which could result in higher benefits being paid. As we know with any tax things do change over time though. There are lots of different implications with the harmonized sales tax (HST), including what is taxed and what isn’t, transitional rules and more. For more information please refer to http://taxtips.ca/whatsnew.htm