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What do you really need to know about HST?
GST/HST Place of Supply rules are proposed to change effective May 1, 2010. The best document to read about the changes is B-103, a CRA publication with 128 examples on 47 pages
CRA has a special webpage dedicated to Ontario and BC’s HST transition. Your GST account becomes your GST/HST account effective July 1, 2010. Your PST account will terminate within a few months after you have filed any amendments. In British Columbia, the HST is 5% GST plus 7% HST; in Ontario, it is 5% GST plus 8% HST. Partly because of the proposed changes to the Place of Supply rules, it is best to account for the GST and the HST separately. GST and HST are separate laws and rates could change. Using QuickBooks, the perfect way to handle this is to add new sales tax codes, items and groups. (Get a QuickBooks free trial here)
Each province has rebates and credits; their details are in CRA’s GST/HST Notices: #244 applies to Ontario, and #246 to BC; # 247 has general transitional rules for both BC and Ontario. You can find these transition rules in CRA’s GST/HST Info Sheets, notably from #53 through #65.
What should you do in advance of the transition? - Read, research, and try to model the effects of HST on your business
- Know the dates the changes go into effect
- Review what was previously subject to PST and what was not to determine the effect of the changes
- Add new sales tax codes, items and groups but do not delete old codes, items or groups
- Review your forms and make any necessary changes
- Communicate with customers and suppliers and provide staff with training
- Document any new procedures
- Review new mandatory electronic GST/HST filing requirements
- Edit accounts, items, customers and vendors so sales tax codes change on the effective date
- Monitor transactions for transitional rules
What are special areas for concern? - Construction: Percentage of completion and special transition rules
- Public Sector Bodies: Special rates and transition rules
- Large businesses over $10 Million in taxable supplies: Recapture of ITCs and certain expenses
- Competition: When pricing your products and services and negotiating for reduced costs
- Consumers: Pressure to lower prices when your costs are not dropping
Eileen Reppenhagen, CGA, TaxDetective®, Certified QuickBooks ProAdvisor is a regular contributor to Intuit Canada’s Advisor Advantage newsletter. Eileen writes and speaks about accounting and tax. Find more about HST transition at www.taxdetective.ca/hst.html
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