The following is an overview of what HST is, how it affects Canadian businesses, and what steps you may wish to take to get prepared...On July 1, 2010, the Provincial Sales Tax (PST) and the federal Goods and Services Tax (GST) will both be replaced by a single unified tax called the Harmonized Sales Tax (HST).
The unified tax is administered federally. In British Columbia, the rate is 12%. Of that, 7% is allocated to the provincial government, while 5% goes the federal government. For Ontario, the overall rate is 13% - where 8% is provincial and 5% is federal.
While the HST is new for Ontario and BC, it follows similar “tax blending” initiatives already in place in Nova Scotia, New Brunswick, Newfoundland and Labrador - and in over 130 countries around the world. Foreseeable Benefits for Small Businesses Include: - Input Tax Credits (ITCs) will reimburse many of your business purchases that were PST-exempt but now attract HST
- Savings on your input costs could make your business more competitive
- Time and expense saved by no longer managing & remitting a separate provincial tax
Do You Know Where You Stand?Businesses now selling PST-exempt goods and services will have to adjust to a higher tax. Some examples are professional & personal services, like accounting and hair-cutting. Restaurants and intensive labour, such as cleaning & maintenance services, are also included. When Do You Start Charging HST?Be aware of several key implementation rules. For example, as of May 1, 2010, the HST is applicable to taxable goods and services that will be delivered after the July 1 turnover. Your tax management systems will need to reflect this transitional phase. Where Can You Go to Get More Information?A visit to these websites will help you learn more about how the HST affects your business: Get on Board by Following These Necessary Steps: - Figure out the impact of the HST on your budget. Imagine how cash flow projections might change, and plan your corporate spending accordingly.
- Plan to update sales equipment, such as cash registers/POS, so they will charge the correct amount of tax. The same can be done for website interfaces and online payment software so as to collect HST on internet sales.
- Update price lists and catalogues to reflect the HST is an essential move. Your client base will appreciate this if done in advance.
- Talk to your customers & suppliers before the changes are implemented. Show how informed you are about how the tax will affect them.
- Update your purchasing & accounting software. This includes accounts payable, tax credit & taxable benefits calculations and invoicing - as well as spreadsheets that manage expense accounts.
Up-to-date tax management software will eliminate errors and avoid potential confusion. All Intuit’s 2010 QuickBooks products are HST-ready, easing your business’s transition to the new tax system.
Try easy accounting software that's HST-ready
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