HST: Point-of-sale exemption Ontario 8% exemption for status Indians effective September 1.

Tuesday, August 31, 2010

It may have passed undetected, under the radar, when it was announced on June 17th, but a new exemption has been added in relation to the 8% Ontario provincial portion of the HST. Status Indians, starting tomorrow, September 1, are entitled to a "point-of-sale" exemption for goods and services purchased from HST registrants. Effectively, status Indians, purchasing goods or services "off-reserve" will pay only the 5% GST on many goods and services. While this rebate is much broader than existing GST/HST exemptions for status Indians, (generally limited to "on-reserve...

HST: Mileage allocations implications

Monday, August 30, 2010

All registrants know, (and if they don't they may be entitled to an interesting refund) that when a mileage allocation is paid to an employee for meals purposes or for the use of a vehicle in the course of his employment, an input-tax credit ("ITC") is automatically  created for the benefit of the employer. For example, if an employer pays an employee a mileage allocation of  40 cents per kilometer totaling $100.00 for mileage performed since July1, under the HST, this $100. Is "deemed" to be an HST-included amount calculated as 13/113 X 100= $11,50; the...

HST: Real Estate: "Grandparented agreements: Consequences for buyers and builders.

Tuesday, August 17, 2010

The "Tax Matters Examiner" is back from a relaxed work load this summer and will continue to provide information on the HST and other tax matters.  The introduction of the HST on July 1, 2010 had a major impact on sale of residential housing. Under the RST, the house builder paid the 8% RST only on his cost of materials. His profit and labor were not included in the tax base. At first glance, the introduction of the HST, which means that both the builder's profit and labor will be subject to an additional 8% tax grab appears to have a detrimental effect on the price of...

HST: RST refund for contractors involved in residential real property renovation.

Thursday, July 8, 2010

Prior to the implementation of HST in Ontario on July 1, housebuilders, renovation contractors and about anyone involved in "real property" contracts were not considered as "vendors" for purpose of the Ontario Retail Sales Tax ("RST"). For example, a roofer renovating your house would not collect the 8% RST on the price charged to repair the roof ( Although the 5% GST did apply). This does not mean that there was no RST involved; in fact, the roofer was considered the "consumer" of the roofing materials and he paid the 8% tax on the purchase of...

HST: Are you ready?

Wednesday, June 30, 2010

Tomorrow, July 1, HST becomes a reality for Ontario and B.C.; in addition  Nova Scotia's existing HST rate jumps from 13% to 15%. Registrants now must deals with rates of 5%, 12%, 13% and 15% not counting Quebec's "harmonized" QST of 7,5%. Are you ready to comply?  Have the appropriate changes been made to your cash registers, computers and accounting systems?  Are your employees properly trained and familiar with the new requirements? Will they be able to properly charge and collect the tax? IF you do sales through the Internet, have the sites been...

Ontario HST first transition payments issued

Monday, June 14, 2010

Did you notice a mysterious $100. or $330 deposit in your bank account?  Or did you receive a $100 or $330 check you did not expect? It's your first Ontario HST transition payment, its part of the program designed to help consumers cope with the new taxable services under the HST that starts on July 1. ( and accept the HST reform) Payment contingent on filing of income tax return All families and individuals that have filed their 2009 income tax return are entitled to this transition benefit. Full benefit is payable to individuals whose net income  is $80,000 or less and...

HST: Selling goods or services to the Ontario Government

Wednesday, May 19, 2010

Businesses that sell their goods or services often misinterpret the law and either fail to collect tax or provide appropriate exemption when dealing with Provincial or Federal Governments. The introduction of HST in Ontario and the introduction of new "place of supply" rules changes considerably the application of taxes in many circumstances. Sales to the Federal Government remain unchanged and are generally subject to GST/HST; however as explained further in this column, the new changes in "Place of supply" rules may have some impact on whether HST at its various...

A reminder: April 30th, deadline to fill your Income Tax return

Monday, April 26, 2010

As discussed in our last column, May 1 triggers important changes related to the GST/HST; nevertheless, it's important not to lose track that for most Ottawa residents the Income Tax Return must be filed by April 30th, in other words, Friday, latest. If taxpayers owe tax for calendar year 2009 and the tax return is filed past April 30th, a penalty of 5% of tax due is applicable  along with an additional penalty of 1% per  additional complete month of tardiness for a maximum of 12 months; "repeat offenders" who have filed late returns for 2006,...

May 1, 2010: Very important date for HST and GST

Friday, April 23, 2010

July 1 may be the official beginning date of the Harmonized Sales Tax in Ontario but all current GST registrants currently doing business in Ontario, which means most registrants of the Outaouais region must take note that they could be required to collect the 13% HST as soon as next week,  on May 1. Indeed where services are involved or where goods are provided through  rentals and leases, the HST transition rules provides that the 13% HST  ( and not the 5% GST and separate 8% RST) applies in certain situations where contracts are entered into before July 1. Service...

Quebec's 2010 Budget: New taxes of all kinds...

Wednesday, March 31, 2010

Finance Minister Raymond Bachand presented his budget yesterday at 4:00 PM; it is a bold budget introducing a long list of higher, and in many cases, totally new levies or taxes. Many polls of the Quebec population  show that Quebeckers appeared less allergic to "revenue increase" than to "governmental services reductions".  Bearing in mind that at least 40% of Quebeckers do not pay any income tax; ( In Ontario, the comparable figure is 30%), it should not be surprising that a majority favors the maintenance of services over tax decreases even if Quebec is...

Ontario Budget 2010: Open Ontario

Friday, March 26, 2010

  Finance Minister Dwight Duncan presented his latest budget speech yesterday. The Budget, as announced contains no new taxes; in terms of tax matters, it contains in fact very few new measures. Generally speaking, the Ontario Government is building on, and continuing the tax plan announced in last year's budget where personal income tax cuts affecting 93% of taxpayers were announced as well as the planned introduction of the Harmonized Sales Tax ("HST") to replace the existing 8% Retail Sales Tax ("RST"). Continuing on that trend, the Budget Speech...

Ontario and Quebec 2010 budgets: no new taxes in Ontario QST hike in Quebec

Tuesday, March 23, 2010

Dwight  Duncan, Ontario's Finance Minister announced Monday that the provincial Budget, to be presented this Thursday will not include any new taxes. However, governmental officials are looking at all their options to help pay down an unprecedented deficit of 25$ billion for the year ending on March 31. While Mr Duncan  said there would be no asset sale announced in the budget either, the governing Liberals have not ruled out possible future privatization of assets such as the LCBO or the Ontario Lottery and Gaming Corp. The Budget should also present Ontario's...

Your tax dollars at work: alleged governmental overpayment for maintenance work.

Wednesday, March 10, 2010

How much does it cost to install a new doorbell in the Public Works department's building ( Portage III in Gatineau)? $1,000.41 How much does it cost to install six new recessed lighting fixtures in the ceiling of the same building? $5,266.80, The cost of two new plants (with pots) for a civil servant office: $1948.72 "Supplementary" costs for cleaning the offices of a Minister's and his deputy: $18,650.87 every six months.... These are just a few of the examples taken from copies of invoices obtained by Hugo deGrandpré of La Presse newspaper under the Access to...

Federal Budget: Not so obvious but important measures

Thursday, March 4, 2010

Everybody and their fathers comments on the Federal Budget. So it is with Finance Minister Jim Flaherty latest budget tabled at 4:00 pm in Ottawa. This time, the Ottawa Tax Matters Examiner chooses to focus on measures which are significant in terms of dollars either as they benefit the government, in other words tax increases (even if called otherwise) and benefits to business or individuals, in other words tax reductions. TAX TREATMENT OF STOCK OPTIONS PLANS According to table A5.1 called "Cost of Tax and Tariff Measures" included in budget documents and...

Federal Budget: More money for "We own the podium"

Wednesday, March 3, 2010

Quoting reliable sources, this morning's La Presse states that the Harper government  has heard the calls of athletes and of Canadians made proud by the successful Vancouver 2010 Winter Olympics. All want to build on the success of our athletes. Accordingly, regardless of the coming austerity measures which will inevitably be necessary to reign in budget deficits, it is believed that Finance Minister Jim Flaherty will confirm in tomorrow's budget that the federal government will "top up" the budget of the now famous "We own the Podium" program. This program...

HST: New "Place of supply" rules announced!

Tuesday, March 2, 2010

On February 25, Finance Canada announced the introduction of new "place of supply" rules. The rather long document is available here. Such rules are not new and became important when the Harmonized Sales Tax (HST) first appeared in 1997 when most of the Maritime provinces merged their retail sales tax with the GST. The introduction of the HST created situations  where it was not obvious which rate should apply, GST or HST. For example, if someone makes a long distance phone call from Ottawa to Newfoundland, must the telephone company collect the GST or the HST?  Is...

March 4 2010 Federal budget: Live on Twitter!

Wednesday, February 24, 2010

Thursday next week, on March 4, the Honourable Jim Flaherty will rise in the House of Commons to deliver the federal 2010 budget. At the same time the Department of Finance Canada will start tweeting. Yup, links to relevant portion of the budget will be tweeted in real time on the popular new social media. Today's  Finance Canada official  news release states that Finance Minister Flaherty explained as follows: “Our Government wants to reach out to inform Canadians of actions we are taking to support the economy. Using social media will bring our message to Canadians in...

HST: "Recaptured" input-tax credits?

Monday, February 22, 2010

The Ontario and British Columbia versions of the "harmonized" sales tax have adopted a feature  of the Quebec Sales Tax ("QST") by limiting the right to input-tax credits for large businesses with annual sales of $10 million or more as well as financial institutions. In the '90s, when Quebec introduced this idea, it was motivated partly by the fear of loss of revenue from the replacement of a single incidence retail sales tax by a value-added tax. At the time 40% of Quebec's revenue from its retail sales tax was generated by sales of gasoline and fuels. The...

HST/GST: New filings requirements

Tuesday, February 9, 2010

Last January 4, at the time when most are still in the Holiday spirits, Canada Revenue Agency, (CRA) announced sweeping changes to the GST/HST reporting and filing requirements. Effective July 1, 2010, all registrants with annual taxable ( including zero-rated and export) sales exceeding $1.5 million will be required to file their GST/HST return electronically or through the internet. Electronic or internet filing also becomes mandatory for anyone required to "recapture" input tax credits for the provincial part of the HST paid on certain taxable supplies acquired in...

HST/GST: Is it "Pay Later" time?

Tuesday, January 19, 2010

GST revenue hit hard by recession It is important to remember  that the GST was introduced in 1991 at the rate of 7%. The Conservative government fulfilled its election promise and reduced the rate to 6% in July 2006 and to 5% in January 2008. Economists (and the Liberal opposition) generally condemned the move because of the regressive nature of value-added taxes. Are these low rates sustainable in the current (post ?) recession era? One thing is sure,  federal budgetary deficits are back with a roar; for the seven month period  from April 2009 to October 2009 the federal...