FEI Canada HST is Near HST is Near FEI Canada June 10, 2010 - PowerPoint PPT Presentation

Tax Tax FEI Canada – – HST is Near HST is Near FEI Canada June 10, 2010 June 10, 2010 Danny Crawford, CMA Regions West Tax 1

Harmonized Sales Tax Harmonized Sales Tax Agenda Agenda Harmonization - - Harmonization Landscape & Overview Landscape & Overview Transitional Rules Transitional Rules Recaptured ITC’ ’s s Recaptured ITC Place of Supply Rules Place of Supply Rules Self- -Assessment Assessment Self 2

Canadian Sales Tax Landscape Effective July 1, Canadian Sales Tax Landscape Effective July 1, 2010 2010 5% GST 5% GST 5% GST 12% HST 13% HST 5% GST 5% GST 7% PST 5% GST 5% GST 7.5% QST 5% GST 10% PST 13% HST 5% PST 15% HST 13% HST 3

Harmonized Sales Tax Harmonized Sales Tax Quick Update Quick Update Tax base under HST not substantially different from Tax base under HST not substantially different from GST (with exception of the point of sale items) GST (with exception of the point of sale items) however: however: BC and ON Provincial government departments, BC and ON Provincial government departments, agencies and crown corporations will ALL pay HST agencies and crown corporations will ALL pay HST for supplies beginning July 1, 2010 for supplies beginning July 1, 2010 8 Place of Supply Zones in Canada 8 Place of Supply Zones in Canada New reporting requirement for recaptured ITC’ ’s s New reporting requirement for recaptured ITC (RITC RITC’ ’s s) ) ( 4

5 HST Transitional Rules HST Transitional Rules

HST – Transitional Rules HST – Transitional Rules General rules – – For supplies after June 30, 2010 For supplies after June 30, 2010 General rules HST on consideration payable on or after July 1, 2010 HST on consideration payable on or after July 1, 2010 No HST if invoiced or paid before October 15, 2009 No HST if invoiced or paid before October 15, 2009 GST and PST, where applicable, if invoiced or paid GST and PST, where applicable, if invoiced or paid after October 14, 2009 and before May 1, 2010 after October 14, 2009 and before May 1, 2010 HST on most prepayments between May 1, 2010 and HST on most prepayments between May 1, 2010 and June 30, 2010 June 30, 2010 Specific rules Specific rules 6

HST Transitional Rules HST Transitional Rules Tangible Personal Property (Goods) – GST- PST Tangible Personal Property (Goods) – GST- PST or HST or HST What does it all mean? What does it all mean? Will you have to self- -assess the provincial component? assess the provincial component? Will you have to self When do you have to self- When do you have to self -assess, if applicable? assess, if applicable? How will you track the amounts on which to self- How will you track the amounts on which to self -assess? assess? Invoiced amount + GST Invoiced amount + GST + Invoiced + PST PST amount + HST Delivery and Ownership of Goods Special self-assessment October 15, 2009 April 30, 2010 June 30, 2010 rules for some non- consumers 7

HST HST Leases and Licences – GST/HST and PST Leases and Licences – GST/HST and PST General HST rule General HST rule HST will generally apply to the part of a lease interval that occurs on curs on HST will generally apply to the part of a lease interval that oc or after July 1, 2010 or after July 1, 2010 Exception - - No HST if lease interval begins before July 2010 and No HST if lease interval begins before July 2010 and Exception ends before July 31, 2010 ends before July 31, 2010 General PST rule General PST rule PST will cease to apply to the lease of property for the part of the the PST will cease to apply to the lease of property for the part of lease interval that is on or after July 1, 2010 lease interval that is on or after July 1, 2010 However, PST will apply if lease interval begins before July 2010 0 However, PST will apply if lease interval begins before July 201 and ends before July 31, 2010 and ends before July 31, 2010 8

HST HST Leases and Licences – GST/HST and PST Leases and Licences – GST/HST and PST Similar transitional rules to services Similar transitional rules to services Lease Interval (No. 1) Exception - Lease Interval (No. 2) (Example: June 15 to July 14) Lease Interval (No. 3) Lease Interval (No. 4) July 1, 2010 9

HST HST Intangible Personal Property Intangible Personal Property General rule General rule HST will generally apply to consideration that becomes due or is HST will generally apply to consideration that becomes due or is paid on or after July 1, 2010 for a supply of intangible personal paid on or after July 1, 2010 for a supply of intangible persona l property by way of sale property by way of sale Special rules Special rules Memberships Memberships Lifetime memberships Lifetime memberships Admissions Admissions Passenger transportation passes Passenger transportation passes 10

New Recaptured New Recaptured Input Tax Credit Requirements Input Tax Credit Requirements 11

Recaptured ITCs – Phase Out Recaptured ITCs – Phase Out RITC requirements RITC requirements Applies to “ “Large Businesses Large Businesses” ” Applies to Provincial component of HST paid or payable Provincial component of HST paid or payable Specified goods and services Specified goods and services RITC period is July 1 RITC period is July 1 – – June 30, not fiscal year. June 30, not fiscal year. RITC is temporary and will be phased out RITC is temporary and will be phased out First 5 Years 100% (full denial) First 5 Years 100% (full denial) Year 6 Year 6 75% 75% Year 7 50% Year 7 50% Year 8 Year 8 25% 25% Year 9 onwards 0% (full ITCs available) Year 9 onwards 0% (full ITCs available) 12

Recaptured ITCs – Who Is Affected? Recaptured ITCs – Who Is Affected? Large Business Large Business Annual taxable supplies for taxpayer exceeding $10 Annual taxable supplies for taxpayer exceeding $10 million in previous fiscal year million in previous fiscal year Financial institutions and related parties and related parties Financial institutions Bank, credit union, insurer, etc. Bank, credit union, insurer, etc. Excludes: Excludes: Public Service Bodies Public Service Bodies Principal business is farming Principal business is farming Item is acquired only for resupply Item is acquired only for resupply 13

Recaptured ITCs – Specified Goods and Recaptured ITCs – Specified Goods and Services Services Specified property and services Specified property and services Road Vehicle Road Vehicle Energy Energy Telecommunication Telecommunication Meals, beverages, entertainment Meals, beverages, entertainment Motor fuel (other than diesel) – – Ontario only Ontario only Motor fuel (other than diesel) 14

Recaptured ITCs – Reporting Recaptured ITCs – Reporting Must report RITC in return for “ “reporting period reporting period” ” when when Must report RITC in return for ITC first becomes available ITC first becomes available Separately identify RITCs (by province) on the Separately identify RITCs (by province) on the GST/HST return GST/HST return The amount of ITC’ ’s that is recaptured will be reported s that is recaptured will be reported The amount of ITC in separate information fields on the schedule in separate information fields on the schedule Estimation/installment approach Estimation/installment approach 15

16 New HST Place of Supply Rules

New HST Place of Supply Rules – Tangible New HST Place of Supply Rules – Tangible Personal Property Personal Property Nothing new in terms of Place of Supply Rules for Nothing new in terms of Place of Supply Rules for supplies of tangible personal property supplies of tangible personal property GST/HST will apply depending on where possession GST/HST will apply depending on where possession and ownership of the TPP is provided to the recipient and ownership of the TPP is provided to the recipient 17

New HST Place of Supply Rules – Services New HST Place of Supply Rules – Services To determine HST place of supply of services: To determine HST place of supply of services: Type of service is important Type of service is important Determine if supplier has obtained recipient’ ’s home or s home or Determine if supplier has obtained recipient business address “ “in the normal course of business in the normal course of business” ” business address Determine percentage of “ “Canadian element Canadian element” ” Determine percentage of performed in HST province(s) performed in HST province(s) Several exceptions to general rules of HST place of Several exceptions to general rules of HST place of supply for services supply for services 18