You don't have to die by July 1 to save 7 or 8 per cent in tax. You just have to pay for your funeral by then.
The death-care business in Ontario and British Columbia is gearing up for a marketing push to persuade consumers to prepay their funerals so they won't be hit with the new harmonized sales tax.
With both provinces set to introduce the HST on July 1, transitional rules make it difficult to avoid higher costs from the combined tax by paying for services in advance.
One of the few exceptions is for future funerals. If a contract is signed and payments begin before the end of June, the HST will not be added to the total bill.
It is expensive to die, and to throw another 8 per cent on top of that is pretty significant. Mike Sheedy of Pinecrest Remembrance Services
Currently, only the GST applies to most of the costs of a funeral. As of July 1, the higher HST rate (which incorporates provincial sales taxes) will apply. On a $10,000 funeral, the new tax will add about $800 in Ontario and $700 in B.C.
In Ontario in particular, the funeral industry wants to get out the message to potential customers that they can save substantially if they book before the end of June.
"There is going to be strenuous effort to market this," said Harry Renaud, executive director of Guaranteed Funeral Deposits of Canada (GFD), a not-for-profit organization that helps 350 Ontario funeral homes manage the money they glean from prepayments.
GFD has prepared advertising and marketing materials that can be used by individual funeral homes, which "are all gearing up to … conduct quite a marketing campaign in their respective communities," he said.
Mr. Renaud said he has not yet seen a jump in prepaid funerals, but "we're anticipating that there could be quite a spike in new business, probably in the month of June as a runup to the July 1st deadline." In the long run, this won't likely create much "new-found money" for the industry, he said, as prepaid business may slow somewhat after July 1 when the tax hits.
Mike Sheedy, vice-president of operations at Pinecrest Remembrance Services Ltd. in Ottawa, said funeral homes feel it is crucial to ensure potential clients are informed that they can avoid the HST. After the GST was put in place in 1991 - with a similar exemption for prepaid funerals - some families later told his company they didn't know about the arrangement, but would have taken advantage of it if they had been informed.
"We learned a fairly valuable lesson back then," and funeral home operators don't want to repeat the mistake, Mr. Sheedy said. "It is expensive to die, and to throw another 8 per cent on top of that is pretty significant."
Pinecrest is already running radio ads that promote the savings that can be gleaned by prepaying funeral services before the HST hits in July.
"This July, the new harmonized sales tax will add 8 per cent to the cost of funeral preplanning," a soothing announcer's voice says over quiet piano music. "Preplanning is always a wise choice and even more so now."
In B.C., the marketing effort is less centralized, said Justin Schultz, president of the Funeral Service Association of British Columbia.
"We have communicated [information about the tax]to our members, but have largely left the effort up to individual firms to promote it as they see fit," he said. Many are getting the message out now, he said, through print materials, posters and brochures geared mainly to families that are already clients.
Mr. Schultz, who is also manager of the Valley View Funeral Home in Surrey, B.C., said his association has told the provincial government there are ways it could mitigate the financial impact of the HST on individuals who are bereaved.
One possibility is a tax break for the estate of the deceased person. He hopes this might be included in the next provincial budget.
Mr. Schultz said his concern is that the new tax will create a bigger burden on many families who are already facing an unexpected funeral expense.