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Tuesday, June 22, 2010

Ontario and British Columbia Transition to Harmonized Sales Tax

Beginning July 1, 2010, a new Harmonized Sales Tax (HST) will be implemented in Ontario and British Columbia at 13% and 12% respectively. Administered by the Canadian Revenue Agency, the HST will replace any existing Provincial Sales Tax (PST) and/or Goods and Services Tax (GST) currently in effect for these provinces.

What is the Harmonized Sales Tax?
Currently, the PST is charged at every step of production, distribution, and retail processes. The added cost of PST is then passed down to consumers along with a separate GST charge. [i]

However, after July 1, the Canadian Revenue Agency will combine the PST and GST for an overall 13% or 12% HST, depending on location. The HST is then broken down for use on both the provincial and federal level. In Ontario 8% of the tax will be used towards provincial needs, while 5% will apply to the federal level. Similarly, in British Columbia 7% will be used towards provincial needs and 5% on a federal level. [ii]

Fortunately, after the Canadian Revenue Agency puts the new tax into effect, there will be little change in terms of actual pricing. According to the Ontario Ministry of Revenue, while 17 % of personal and professional services and energy costs will see a new tax, about 83% of products and services purchased by consumers will not. [iii]

What does this mean for libraries?
HST will generally follow the same rules and tax base as the GST, with some exceptions. Audiobooks and Playaways will be eligible for a point-of-sale rebate in Ontario and British Columbia on the provincial portion of the HST. In other words, they will only be subject to the federal portion, or 5%, of the HST. CVS Midwest Tape invoices dated July 1 and after for these provinces will reflect this change.


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