HST. String those three letters together lately and you’re likely to get a strong response, regardless of what you do for work or where in the province you reside. Like it or not, the Harmonized Sales Tax is set to come into effect on July 1st as planned. At that time, BC residents will experience a learning curve as they get used to what is HST-applicable and HST-exempt.
Many of us also bear the responsibility of ensuring a smooth transition to the HST for small businesses we own or manage. So where can we get reliable information, and how can we prepare? Here are a few key tips I discovered after speaking with Kate Amangoulova, a CGA from Langley, and reading the Provincial Government’s HST Blog.
Learn what products and services are subject to rebates and exemptions.
The government’s HST blog lists a wide range of items and services for which instant rebates will apply or tax will not be charged. It’s worth examining to determine if any of the changes apply to your business.
If you currently charge 5% GST for services provided, they will be subject to 12% HST on July 1st. If you already charge both taxes, ensure your invoices reflect only one tax line (HST) after June 30th.
Be prepared to serve your customers.
If you provide products, familiarize yourself with which items are HST-applicable and HST-exempt. If you provide services, review your client list and ensure your accounting system is set up to charge out-of-province clients a correct rate of sales tax. If you provide services for clients in other provinces, they should be charged at their rate of GST or HST, not BC’s.
Consult the transitional rules.
Do any of your transactions straddle the July 1st HST activation date? This may be the case with professional services and real estate transactions. Ensure you charge HST for billings on or after May 1st for taxable goods, services or intangible property to be supplied after July 1st.
Assess how HST will impact your budget.
How it will affect your purchasing? Account for lower costs and double check quotes from suppliers to ensure any tax savings are passed to you.
Upgrade your point-of-sale system and accounting software.
Ensure that after June 30th they are set to start recording HST. Several popular software programs, including Quickbooks, have now released upgrades that will manage the tax update beautifully.
Hold on to that GST number.
Your HST reporting period is the same as your GST reporting period. You don’t need to register for HST with the Province; if you have previously obtained a GST number (for businesses earning more than $30,000 annually) it will become your HST number. However, if you don’t meet the threshold of $30,000 in annual taxable sales, it may not be mandatory for you to register for GST/HST.
File your PST.
Regardless of your PST filing frequency, your final PST return is due on July 23rd. If you have overpaid PST, file a PST refund claim as soon as possible.
Attend a seminar and talk to your accountant.
The Canada Revenue Agency is holding HST-preparedness seminars and webinars at no charge which may be helpful for those who have questions about the new tax. If you have more specific concerns, it may also be worthwhile to schedule a meeting with your accountant.
The information and materials in this article are provided for general information purposes only and are not intended to constitute legal, accounting or tax advice or opinions on any specific matters. Laws and regulations change frequently and their application can vary widely based upon the specific facts and circumstances involved. Therefore you are advised to seek legal, accounting, financial or other professional advice prior to using this material for any reason whatsoever.