HST about to take effect
Tax Benefits for Consumers
Helping Consumers Transition to the HST
The HST, which combines the existing 8 per cent PST and the 5 per cent federal GST into a single 13 per cent sales tax, comes into effect July 1, 2010. To help ease the transition to the HST, some transition rules take effect May 1.
- As of May 1, if you pre-pay for something that you're going to use on or after July 1, the HST will generally apply.
- You will not be charged HST for any goods received or services performed before July 1.
Example: In May 2010, a person pays for seasonal yard maintenance service, 50 per cent of which will be performed on or after July 1. The HST would apply only to the 50 per cent performed on or after July 1.
Example: In June 2010, a person purchases a four-month membership in a fitness club for the months of June through September 2010. The HST would be payable only on the last three months of the membership (i.e., July, August and September).
There are some important exemptions to this May 1 transition date that you should be aware of — you will not be charged HST if you pay before July 1, 2010 for:
- Magazine subscriptions
- Prepaid funerals if the contract is entered into in writing before July 1, 2010
- Passenger transportation services if the continuous journey begins before July 2010
- Freight transportation services if the continuous freight movement begins before July 2010
- Passenger transportation passes if the pass period begins before July 2010 and ends before August 2010
Ontario's transitional rules are the same as those in B.C. and are similar to those used in the Atlantic provinces and Quebec, as well as those used when the GST was introduced nationally.
Remember that that most products people buy every day – like basic groceries, prescription drugs and municipal public transit – will see no change in tax with the HST. In fact, 83 per cent of consumer purchases will not see a new tax; only 17 per cent of consumer purchases will be affected by the HST.
Buyers of new homes will receive a rebate of up to $24,000 regardless of the price of the new home.
- Buyers of new residential rental properties will receive a similar rebate
- The HST will not apply to purchases of resale homes.
What's Taxable Under the
HST and What's Not?
Most products we buy will see no new tax
Most of the products we buy every day will see no new tax. There are a lot of products and services on which we already pay the PST and GST. For these products, like cable and phone services, new cars and adult clothing, there won't be a change. On July 1, 2010, instead of paying 13 per cent tax to two different governments (8 per cent provincial and 5 per cent federal), there will be one tax — still 13 per cent, collected by the federal government.
No PST now, no HST after July 1, 2010
There are some other items now that have no sales tax on them, such as basic groceries, municipal transit and prescription drugs. On July 1, 2010, there will still be no HST charged on these items.
Point-of-sale rebate
Other products will be eligible for a point-of-sale rebate for the provincial part of the HST. This means you will only pay the 5 per cent federal portion of the HST. These include print newspapers, books (including audio books), diapers, children's clothing and footwear, children's car seats and booster seats, feminine hygiene products, and qualifying prepared food and beverages sold for $4.00 or less.
No new tax for 83 per cent of products and services
In total, about 83 per cent of products and services purchased by consumers will see no new tax. Only 17 per cent will see a new tax, things like personal and professional services such as hairstyling and legal fees, as well as energy costs including home heating fuel and electricity.
Posted by Jo-Anne Gannon
on June 22, 2010