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Shoppers carry their bags through the Eaton Centre in Toronto, May 30, 2010. (J.P. MOCZULSKI)
Shoppers carry their bags through the Eaton Centre in Toronto, May 30, 2010. (J.P. MOCZULSKI)

Ask The Experts

HST business questions from readers answered Add to ...

You can continue to use the Quick Method, but right now there is no definitive answer as to the rates. As a service business located in Ontario, making supplies in Ontario and Quebec, you will be presently using a rate of 3.6 per cent. After July 1, you will be located in a participating province (Ontario) and making supplies in both a participating province (Ontario) and a non-participating province (Quebec), so you will likely be required to use two rates. The rates are set by regulation and as yet nothing has been released that specifically contemplates the changes to take effect on July 1. At present the rates that apply to a service business located in a participating province are 1.8 per cent for sales made in a non-participating province and 8.8 per cent for sales in a participating province. However, those rates were set when all participating provinces had the same rate of tax, 13 per cent. We expect new rules will be released shortly.

Normally once you have elected to use the Quick Method you may only revoke that election after it has been in effect for at least a year and only as of certain dates. However, residents of Ontario and British Columbia will have a special opportunity to revoke those elections should they wish to do so. If you feel this election may no longer be advantageous, you may wish to look into this alternative.

Question from 'Renfew Ontario:' Under the GST, an order for goods or services placed outside of Canada was not subject to tax. Does a similar exemption apply to the HST for goods or services order from and delivered off-shore?

Mr. Bonney's answer for BC: Yes, you’re right, the HST won’t apply. Here’s some information directly from Canada Revenue Agency (CRA): “Goods (other than excisable goods such as beer and tobacco) that are ordinarily GST/HST taxable supplies may be zero-rated if they are exported from Canada. This means that you do not charge GST/HST on taxable sales if you deliver the goods or make them available to a purchaser outside Canada.” The most important thing to remember is that the purchaser cannot be a consumer, whereby the consumption happens in Canada. There are a few other conditions. Please see more here.

Mr. Bonney's answer for Ontario: The general rule is that if the goods or services are subject to GST now, they will be subject to HST as of July 1. If they are ordered from and delivered outside of Canada no HST will apply. If the goods or services are imported in Canada, they will be subject to the federal portion of HST. More information on imports here.

Question from 'David S.13:' I am a consultant supplying services through my BC-based company. Many of my clients are in Alberta, and they will now see taxes on my services increase from 5 per cent to 12 per cent. This will put me at a disadvantage to competing consultants from Alberta. Can I avoid this increase by registering my company in Alberta?

Janet Kasun: You don’t need to register your company in Alberta. Whether or not the taxes on your services are charged at a rate of 5 per cent or 12 per cent is not determined based on where you are or where your company is registered, but by application of principles known as the place of supply rules. You and your competing consultants should all be charging the same client the same rate for the same type of service regardless of where you are located.

The place of supply rules can be complex but generally the tax rate is determined by where the client is located, not the service provider. If, for example, you are providing general advisory services to a client that operates from only one address in Alberta and your services have nothing to do with real or personal property situated in British Columbia, the place of supply will be Alberta and you will only be required to collect the 5 per cent federal rate of GST.

Question from 'Paul Bearer:' Would I be correct in stating the cost of hardwood flooring will be the same (tax-in) before and after July 1 (in BC)? PST will come off for lumber producers after July 1 (lower base cost) but for consumers will the lower cost of goods be replaced by the equivalent HST? And where could I get a complete list of goods and services that will have HST? Perhaps the list is not yet complete, and if that is the case there should be no implementation date in place until a list of goods and services is 100 per cent in place.

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