Are You Ready? GST/HST Rules and Filing Requirements

Author: Mark Servello, CGA, Tax Manager, Kenway Mack Slusarchuk Stewart LLP, Chartered Accountants

Harmonized Sales Tax (HST) in British Columbia and Ontario

Implementation of the proposed changes to the GST/HST rules and filing requirements is coming soon. In some cases, the proposed changes are already applicable.

Effective July 1, 2010, HST will apply in British Columbia (BC) and Ontario. BC will have an HST rate of 12% and Ontario's HST rate will be 13%.

It should be noted that transitional rules are applicable to most transactions that straddle the July 1, 2010, implementation date. In most cases where transactions straddle July 1, 2010, HST will apply to any amount that becomes due, or is paid without having become due, on or after May 1, 2010.

New Electronic Filing Requirements

For GST/HST reporting periods that end on or after July 1, 2010, the following registrants will be required to file their GST/HST returns electronically:

All registrants with greater than $1,500,000 in annual taxable supplies (except for charities). The $1,500,000 annual threshold includes the annual taxable supplies of all associated persons.
Registrants that are required to recapture input tax credits for the provincial portion of the HST on certain taxable supplies acquired in BC or Ontario.
Builders that are affected by the transitional housing measures announced by BC or Ontario.

The Canada Revenue Agency has four electronic filing options available:

GST/HST Netfile
GST/HST Telefile
Electronic Data Interchange (EDI)
GST/HST Internet File Transfer (GIFT)

The electronic filing options available to a particular registrant will depend on that registrant's reporting circumstances. Penalties will apply, if a GST/HST return is not filed in the correct format.

Place of Supply Rules

Earlier this year, changes were announced to the place of supply rules for determining whether a supply is made in a particular province. There were no changes made to the rules for supplies of tangible personal property or supplies of real property; however, significant changes were made to the rules for supplies of intangible personal property and most services.

In the past, the HST place of supply rules for property and services generally relied on the location of the supplier to determine whether a sale was subject to the provincial component of the HST. These rules have been changed for supplies of intangible personal property and most services. In most cases, the supplier's location would not be relevant, since the reliance has now been placed on the location of the consumer of the intangible personal property or service.

These changes apply to all supplies made on or after May 1, 2010, and also apply to any supply made after February 25, 2010, and before May 1, 2010, if the consideration for the supply did not become due and was not paid before May 1, 2010.

Changes in the place of supply rules and the implementation of HST could result in planning opportunities. Now would be a good time to contact your accountant to discuss ways they can assist you during this implementation period.

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