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The harmonized sales tax (HST) rebates have started rolling in for those Ontarians who qualify. While the HST takes effect in Ontario and British Columbia on July 1, 2010, only the Ontario government is giving a one-time payment to individuals and families to offset the increased costs they will face as a result of the new tax. Retailers have a few ideas about how to spend your rebate, but you might be more eager to save.

Single Ontario tax filers over the age of 18 who make less than $80,000 per year will receive three cheques totaling $300. Families who earn less than $160,000 per year will get three cheques totaling $1,000.

If you fall under one of these categories, you have already received your cheque in the mail or seen the funds deposited directly into your bank account. You can expect the second payment in December 2010 and the third in June 2011.

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There is no question that the HST will cost families more. "Homeowners at the end of the day will be faced with the burden," says Frank Bilotta, an associate partner and tax specialist with SBLR LLP Chartered Accountants. "This is a one-time deal for lower income families."

One study by the NDP has suggested that the average family will pay an additional $792 annually. Even Ontario Premier Dalton McGuinty has admitted that the tax will cause some short-term pain, but the government, along with many economists, expects it to eventually result in savings passed on by businesses.

It's unlikely that those savings will trickle down to the average consumer in the first year of the HST's implementation, making the one-time rebate little more than a conciliatory gesture by the government. But chances are most aren't setting the money aside to cover the additional tax anyway.

Derek Szeto, founder of coupon site, believes many consumers will see the HST as a windfall to take shopping. In a chat forum on the website devoted to the HST, many posters were not aware of the government rebate. "When it's a surprise, you're more likely to just spend it," says Mr. Szeto. "If the government had told them very clearly this is what you'll get, people might see that as the purpose and plan for it."

Mr. Szeto expects retailers will try to capitalize on the unexpected extra cash in consumers' pockets and encourage spending through special promotions. He is already seeing some sales advertising by large retailers such as the Bay that he believes is carefully timed to coincide with the HST rebate cheques. "They're not saying it is HST- related, but for me it's fairly obvious."

Shoppers may be spurred to buy in the days before the HST actually goes into effect. For example, visitors have shown a heightened interest in hardwood flooring and other home improvement products. If the renovations can be completed ahead of July 1, consumers will avoid paying HST on the work.

Some Ontarians will use their HST cheque for purposes other than new purchases, putting it into a TFSA or against credit card debt, but it's still unlikely that people are segregating it for the HST, Mr. Szeto says. "They'll put it to the best place they can right away. It's sort of found money and even though it's temporary money, it's always nice to get a cheque."

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