I wanted to touch base to remind everyone that BC’s new HST (Harmonized Sales Tax) is now in effect for goods and services purchased in BC. As of July 1 2010 most goods and services now have a total tax of 12%. The 12% is a combination of the Goods and Services Tax or GST (5%) and Provincial Sales Tax (7%) and is payable on real estate commissions.
For those of you who’s offers were accepted prior to July 1 2010 but who’s sales don’t complete until after July 1 2010 there is a formula that will be applied based on when the bulk of the services were provided and the additional 7% tax will be applied to that respective portion of the commissions. GSt of 5% is applied to the percentage of services provided prior to July 1 2010.
For those of you who do not have an accepted offer as of now, it may prove difficult to justify this argument to Canada Revenue Services, even if you were listed prior to July 1 2010 and my services were in large part provided prior to the July 1 cutoff. In my humble opinion I anticipate that anyone receiving an offer on a property currently listed will incur HST on the full real estate commissions. In this case, your commissions costs will be 7% higher than they were previously when the 5% GST was the only applicable tax on real estate commissions.
Anyone who’s listing commences after July 1 2010 will certainly incur the full 12% HST on the full real estate commissions.
In any case, I strongly encourage you all to consult with your tax accountants on this matter as it seems unclear in the minds of many and there seem to be any number of interpretations in the application of this tax on real estate commissions during this transitional period.
Please contact Shaun directly firstname.lastname@example.org to discuss whether it's a good time for you to buy or sell and please feel free to comment on this or any of my other Blogs or visit me at www.shaunkimmins.com