Beginning of HST – How HST Affect Your Business
Canada Day, also the first day of HST officially apply to British Columbia and Ontario.
Who To Call for HST Questions?
CRA has taken serious step to assist business on this transition. Even Canada Day they are still working to serve us. If you have any questions regarding HST you can call 1-800-959-5525 from 9:15am – 8:00pm.
HST Tax Benefits for My Business?
You may find that the government are preaching the benefits of HST with a lot of tax benefits. It can be very confusing to some as what does the HST bring us other than changing our invoice to our customers.
There will be tax cuts, but you won’t see them related to HST. When you file your business tax return the end of your fiscal year after July 1st 2010, you will notices there are small tax rate decrease here and there. You wouldn’t even know these tax cuts have anything to do with HST.
Small Business Transition Credit
The only one that will directly effect your business is the Small Business Transition Credit. For businesses that annual revenue less than $2 million will be eligible for this credit up to $1000. While not too much, it is something.
HST Rebates
There are a lot of rebates opportunities to bring about tax benefits. There are a lot of rebates apply for specific industries. You can find the list here http://www.cra-arc.gc.ca/gncy/hrmnztn/pblctns-eng.html. Simply put, the previous GST credit (ITC) how becomes HST rebates. This implies that you now can claim more Input Tax Credit (ITC).
Example:
What you used to do with GST rebate:
1. If you are in Ontario, and You used to sell your product of $100, you collected GST of $5 and PST of $8. Note that you need to pay $13 in total when you file GST and PST.
Product $100 GST $5 PST $8 Total $113 GST Collected $5 PST Collected $8 Taxes need to be pay $13 2. You bought boxes of paper for your business, you paid GST of $5
Boxes of Paper $100 GST $5 PST $8 Total $113 ITC credit $5 3. When you file your GST, the ITC credit of $5 offset the GST Collected of $5. Hence you do not need to pay GST. Note that you do not get any credit for the $8 PST you have paid.
Total Tax Paid $13 Total Tax Credit $5 Grand Total Tax Paid $8
What you do with HST:
1. You used to sell your product of $100, you collected HST of $5
Product $100 HST $13 Total $113 HST Collected $13 2. You bought boxes of paper for your business, you paid GST of $5
Boxes of Paper $100 HST $13 Total $113 ITC credit $13 3. Now you can see that you are claiming the whole amount you have paid
Total Tax Paid $13 Total Tax Credit $13 Grand Total Tax Paid $0
What to Charge HST and What Not To Charge?
For most businesses, the amount to charge for HST will be exactly the same as before really. For example, if you are charging GST and PST for the items you are selling, now to charge HST which are the same as the combination of GST and PST.
There are some exceptions, here are the most common ones that will change for Ontario
| Previous | Now | |
| Alcoholic Beverages | 5% GST and 10-12% PST | 13% HST |
| Electricity and Heating | 5% GST only | 13% HST |
| Internet Service | 5% GST only | 13% HST |
| Home Maintenance and Renovation Services (e.g. Plumber, Electrician, Lawn Care, etc) | 5% GST only | 13% HST |
| Other than Local Public Transit (e.g. Taxis, plane, rail, boat, etc) | 5% GST only | 13% HST |
| Fuel | 5% GST only | 13% HST |
| New Homes over $400,000 and Real Estate commission | 5% GST only | 13% HST |
| Legal Fees | 5% GST only | 13% HST |
| Accounting Fees | 5% GST only | 13% HST |
| Tobacco | 5% GST only | 13% HST |
There are variance between BC and ON. For an extensive list, go to http://www.rev.gov.on.ca/en/taxchange/taxable.html for Ontario, and http://hst.blog.gov.bc.ca/wp-content/uploads/2010/05/GST_PST_HST_List_v04.pdf for BC. These lists covers most of the items which may or may not impact by HST. However if you need even more information, you can go to the GST/HST Technical Information Bulletin at http://www.cra-arc.gc.ca/E/pub/gm/b-103/b-103-e.pdf.
How and When to File HST?
Filing HST will be EXACTLY THE SAME as filing GST. The only different is that your business will no longer need to file PST to your provincial ministry of finance. The GST and HST form in fact is the same form. If you have overlapping period, your record the GST collected and GST ITC amounts before July 1st, and anything after July 1st you calculate using HST.
For example: You file GST Quarterly with fiscal year end in Feb 31st. The quarter of June – Aug will include both GST and HST calculation.
| GST/HST Collected | ITC | |
| June | $10,000 GST Collected | $5,000 GST ITC |
| July | $20,000 HST Collected | $10,000 HST ITC |
| Aug | $20,000 HST Collected | $10,000 HST ITC |
| Line 103 (total GST/HST Collected) | $50,000 (total of the above) | |
| Line 106 (total GST/HST ITC) | $25,000 (total of the above) |
References
HST for Ontario – http://www.rev.gov.on.ca/en/taxchange/taxable.html
HST for BC – http://hst.blog.gov.bc.ca/
HST Publication – http://www.cra-arc.gc.ca/gncy/hrmnztn/pblctns-eng.html
GST/HST Technical Information Bulletin – http://www.cra-arc.gc.ca/E/pub/gm/b-103/b-103-e.pdf
