Ontario Sales Tax Ontario Sales Tax Harmonization Harmonization Horne LLP Horne LLP st , 2010 March 31 st , 2010 March 31 Prepared by: Horne LLP Prepared by: Horne LLP 1
Outline Outline � Background Background � Overview Overview � GST / HST Basics GST / HST Basics � Transition Rules Transition Rules � Recaptured ITC Recaptured ITC’ ’s s � New Place of Supply Rules New Place of Supply Rules � Winding Down the RST Winding Down the RST � Preparing for HST Preparing for HST � Mandatory Electronic Filing Mandatory Electronic Filing � Questions and Answers Questions and Answers Prepared by: Horne LLP Prepared by: Horne LLP 2
Background Background Implementation of GST / QST / HST Implementation of GST / QST / HST � Comprehensive Tax Reform in Ontario and B.C. Comprehensive Tax Reform in Ontario and B.C. � � Corporate tax cuts Corporate tax cuts � Personal tax cuts Personal tax cuts � Transitional payments Transitional payments Sales Tax Harmonization Sales Tax Harmonization � March 28 th th , 2009 � March 28 , 2009 – Budget Announcement Budget Announcement October 14 th th , 2009 � October 14 , 2009 – General Transition Rules General Transition Rules December 15 th th , 2009 � December 15 , 2009 – Federal and Ontario Bills Pass Federal and Ontario Bills Pass February 1 st st , 2010 � February 1 , 2010 – Recapture of ITC Recapture of ITC’s February 25 th th , 2010 � February 25 , 2010 – New Place of Supply Rules New Place of Supply Rules Future? Future? � Information: Information: � � Canada Canada www.cra.gc.ca/harmonization www.cra.gc.ca/harmonization � Ontario Ontario www.ontario.ca/taxchange www.ontario.ca/taxchange Prepared by: Horne LLP Prepared by: Horne LLP 3
Overview of HST Overview of HST � Single Rate Value Added Tax Effective Single Rate Value Added Tax Effective � st , 2010 July 1 st , 2010 July 1 � 13% rate (8% OVAT, 5% GST) 13% rate (8% OVAT, 5% GST) � Administered by CRA Administered by CRA � Same base and structure as GST Same base and structure as GST � Exceptions? Exceptions? � � Point of Sale Rebates Point of Sale Rebates � Recaptured ITC Recaptured ITC’ ’s s � Continuing Taxes Continuing Taxes � New Housing Rebate New Housing Rebate � Loss of Vendor Compensation Loss of Vendor Compensation Prepared by: Horne LLP Prepared by: Horne LLP 4
Point of Sale Rebates Point of Sale Rebates � Children Children’ ’s clothing and footwear s clothing and footwear � � Children Children’ ’s car seats and car booster seats s car seats and car booster seats � � Diapers Diapers � � Feminine hygiene products Feminine hygiene products � � Books (including audio) Books (including audio) � � Printed newspapers Printed newspapers � � Prepared food products sold for $4 or less Prepared food products sold for $4 or less � Prepared by: Horne LLP Prepared by: Horne LLP 5
Recaptured ITC’ ’s s Recaptured ITC � Applies to large businesses, financial Applies to large businesses, financial � institutions, and related entities institutions, and related entities � Restricts Restricts OVAT portion of ITC for: OVAT portion of ITC for: � � Energy Energy � Telecommunications services Telecommunications services � Road vehicles less than 3,000 kilograms Road vehicles less than 3,000 kilograms � Food, beverage and entertainment expenses Food, beverage and entertainment expenses Prepared by: Horne LLP Prepared by: Horne LLP 6
Continuing Taxes (ORST?) Continuing Taxes (ORST?) � Alcohol Alcohol � � Transient accommodation Transient accommodation � � Private sales of specified vehicles not Private sales of specified vehicles not � subject to GST subject to GST � Insurance Premiums (except auto) Insurance Premiums (except auto) � Prepared by: Horne LLP Prepared by: Horne LLP 7
New Housing Rebate New Housing Rebate � Refunds for buyers of: Refunds for buyers of: � � New homes New homes � New residential rental property New residential rental property � OVAT refund of up to $ 24,000 OVAT refund of up to $ 24,000 � � Regardless of the price of new home Regardless of the price of new home � Prepared by: Horne LLP Prepared by: Horne LLP 8
GST / HST Basics GST / HST Basics Recipient Recipient - - person liable to pay consideration for the supply person liable to pay consideration for the supply � Supply - provision of property or a service in any Supply - provision of property or a service in any � manner, including sale, transfer, barter, manner, including sale, transfer, barter, exchange, license, rental, lease, gift or disposition exchange, license, rental, lease, gift or disposition Consideration - - includes any amount that is payable Consideration includes any amount that is payable � for a supply by operation of law for a supply by operation of law GST/HST is payable by the recipient recipient on the earlier of: on the earlier of: GST/HST is payable by the � The day the consideration The day the consideration for a for a supply supply is paid, and is paid, and � The day the The day the consideration consideration for the supply becomes due for the supply becomes due � Prepared by: Horne LLP Prepared by: Horne LLP 9
Consideration Becomes Due Consideration Becomes Due � Earliest of the following days: Earliest of the following days: � � The date of the invoice for the amount of the The date of the invoice for the amount of the supply; supply; � The day the supplier first issues the invoice for the The day the supplier first issues the invoice for the amount; amount; � If there is an undue delay in issuing the invoice, If there is an undue delay in issuing the invoice, the day the supplier would have issued the the day the supplier would have issued the invoice; and invoice; and � The day the client is required to pay the amount The day the client is required to pay the amount under a written agreement. under a written agreement. Prepared by: Horne LLP Prepared by: Horne LLP 10 10
General Transition Rule General Transition Rule Supply on or after July 1 st st , 2010 Supply on or after July 1 , 2010 and and Consideration due or paid without becoming due Consideration due or paid without becoming due (A) (B) (C) (D) (A) (B) (C) (D) Oct. 14th May 1st July 1st Oct. 14th May 1st July 1st 2009 2009 2010 2010 2010 2010 No OVAT, ORST applies No OVAT, ORST applies A. A. Certain purchasers required to self- -assess OVAT ( assess OVAT (eg eg. financial . financial Certain purchasers required to self B. B. institutions, those using simplified accounting methods), ORST applies pplies institutions, those using simplified accounting methods), ORST a Vendors required to collect OVAT, no ORST applies Vendors required to collect OVAT, no ORST applies C. C. HST rules apply HST rules apply D. D. Prepared by: Horne LLP Prepared by: Horne LLP 11 11
Requirement to Self Assess OVAT Requirement to Self Assess OVAT � Certain purchasers (other than consumers) are Certain purchasers (other than consumers) are � required to self- -assess the OVAT if: assess the OVAT if: required to self � The supply is: The supply is: � Not used exclusively in commercial activities, (e.g. exempt Not used exclusively in commercial activities, (e.g. exempt supplies) or supplies) or � Subject to ITC restriction or recapture Subject to ITC restriction or recapture � Or, the purchaser: Or, the purchaser: � Uses simplified procedures to calculate net tax under the ETA Uses simplified procedures to calculate net tax under the ETA (e.g. Quick Methods), or (e.g. Quick Methods), or � Is a selected listed financial institution using the special Is a selected listed financial institution using the special attribution method to calculate net tax attribution method to calculate net tax Prepared by: Horne LLP Prepared by: Horne LLP 12 12
Transitional Rule – – Sale of Goods Sale of Goods Transitional Rule Sale of goods where goods are Sale of goods where goods are delivered and ownership is transferred delivered and ownership is transferred to the purchaser to the purchaser on or after July 1 st st , 2010 on or after July 1 , 2010 Does any part of the amount for the goods become due or is paid without having become due on or after July 1 st , 2010? No Yes Does any part of the amount for the goods become due or is paid without having HST applies to that part of the amount become due on or after May 1 st , 2010 and before July 2010? No Yes Does any part of the amount for the goods become due or is paid without having become due HST applies to that part of the amount after October 14 th , 2009 and before May 2010? No Yes GST applies to any part of an amount GST applies to that part of the amount that becomes due or is paid without but certain non-consumers have having become due on or before to self-assess the provincial part of the October 14 th , 2009 HST on that part of the amount Prepared by: Horne LLP Prepared by: Horne LLP 13 13
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