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Ontario HST

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Sales Taxes ->GST/HST -> ON HST
Ontario Tax -> ON HST
Provincial Sales Tax
-> ON HST

Ontario Harmonized Sales Tax (HST)

The 8% Ontario sales tax and the 5% GST were combined into a single 13% value-added sales tax that is federally administered, effective July 1, 2010.

What is Taxable?

Consumers now have to pay 13% HST on all goods and services on which they previously paid 5% GST, except for several items which were previously RST exempt and are not subject to the provincial portion of the HST.  The following are some made-in-Ontario components:
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Books, children's clothing and footwear, diapers, children's car seats and car booster seats, and feminine hygiene products are exempt from the 8% provincial portion of the tax.

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Purchasers of newly constructed homes under $400,000 are not be subject to an additional tax burden.  Buyers of new homes valued between $400,000 and $500,000 can claim a proportional rebate.

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New rental housing rebate, similar to the enhanced new housing rebate, for new residential rental properties.

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Up to $400 million in one-time sales tax credits were to be provided to help small businesses make changes to point-of-sale and accounting systems.

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Provincial portion of the tax rate on transient accommodation, such as hotel rooms, rose from 5% to 8%.  Approximately $40 million a year will be allocated to support destination marketing in Ontario tourism regions once these are established.

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Additional point-of-sale exemptions announced November 12, 2009:
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Print newspapers

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Qualifying prepared food and beverages that are ready for immediate consumption and are sold for a total price of not more than $4.00

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Used vehicles purchased privately (not from an HST registrant) are still subject to a retail sales tax (RST) of 13% (increased from 8%).

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Ontario RST continues to apply at 8% on certain types of insurance, including house insurance, group insurance, contributions paid into funded plans or on benefits paid out of unfunded plans as well as payments made into insurance schemes or compensation funds established under an Act of Canada or Ontario.  This is in addition to the Premium Tax on certain insurance premiums.  See Premium Tax on the Revenue Ministry website.

Input Tax Credits

Businesses which are registered to collect GST or HST can claim input tax credits to recover the GST or HST that they have paid, with certain temporary exceptions for large businesses (see below).  The change to HST will mean a significant savings and boost in productivity for businesses in Ontario, because:

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they no longer have to pay PST

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they no longer have to prepare PST remittances

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they save on consulting costs - the PST rules are very complicated, and frequently require professional advice in their interpretation, and courts to make the final interpretation

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employees no longer have to spend time trying to find the answers to PST questions

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PST audits will be eliminated

There is a temporary restriction on input tax credits on certain items for large businesses (generally, those with over $10 million of taxable, including zero-rated, sales) and financial institutions.  The restriction only applies to the provincial portion of the HST.  For more information see the CRA information Temporary Recapture of Input Tax Credit Amounts.

Ontario Sales Tax Transition Benefit (OSTTB)

As part of the sales tax reform, cash payments were provided to Ontario tax filers, in each of June and December 2010, and June 2011.

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Eligible families with income of less than $160,000 received 3 payments totalling $1,000.

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Eligible individuals who earn less than $80,000 received 3 payments totalling $300.

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To qualify for the 2 payments in 2010, a 2009 tax return must have been filed.

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Individuals who turned 18 prior to December 1, 2010, or who had a spouse or common-law partner or lived with a dependent child on May 31 or November 30, 2010, qualified for 1 or 2 of the 2010 payments.

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To qualify for the 2011 payment, a 2010 tax return must have been filed.

For details see Ontario Sales Tax Transition Benefit Questions and Answers on the CRA website

Tax Tip:  Make sure you file your 2009 and 2010 tax returns to get this benefit.

General Transitional Rules for Ontario HST

Transitional rules are required to determine which tax - the existing Retail Sales Tax (RST) or the Ontario component of the HST - would apply to transactions that straddle the July 1, 2010 implementation date.

October 14, 2009

Certain purchasers that are non-consumers had to self-assess the Ontario component of the HST on consideration that became due, or was paid, after October 14, 2009 and before May 1, 2010 for goods and services provided on or after July 1, 2010.  This did not apply if the non-consumer was a GST registrant and was therefore entitled to an input tax credit.

Note:  Consumer means an individual who acquires goods or services for the individual's personal consumption or use or for the personal consumption or use of another individual..

A GST registrant in BC or Ontario should not have been collecting the provincial portion of the HST prior to May 1, 2010, for goods or services provided in BC or Ontario, even if the goods or services were to be provided on or after July 1, 2010.  Prior to May 1, only the 5% GST should have been collected for these goods or services.

May 1, 2010

The HST generally applies to consideration that became due or was paid on or after this date, for property and services provided on or after July 1, 2010.

Some items addressed in the HST transitional rules:

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Funeral services - HST does not apply to funeral services where the contract is entered into before July 1, 2010.

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Transitional RST inventory rebate for residential contracts - A rebate is available for RST embedded in construction materials purchased before July 1, 2010, but used in residential property contracts on or after July 1, 2010.

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Subscriptions to newspapers, magazines and other periodical publications - HST does not apply to subscriptions paid before July 1, 2010.

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Passenger transportation services - HST generally does not apply to round-trip journeys that commence before July 1, 2010.

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Freight transportation services - HST generally does not apply to the cost of a freight transportation service performed on or after July 1, 2010 if the service is part of a continuous freight movement of goods that began before July 2010.

For further information on the HST and transitional rules, see the following:

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GST/HST New Housing Rebate

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What is Taxable, Exempt or Zero-Rated under GST/HST?

Canada Revenue Agency

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All Forms and Publications for GST/HST

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Notice 244 - Harmonization of the Ontario Retail Sales Tax with the GST - Questions and Answers on Housing Rebates, Transitional Rules for Housing and Other Real Property Situated in Ontario

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GST/HST Information SheetsTransition to the Harmonized Sales Tax:
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GI-053 Freight Transportation Services

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GI-054 Passenger Transportation Services

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GI-055 Transportation Passes

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GI-056 Services

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GI-057 Memberships

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GI-058 Admissions

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GI-059 Intangible Personal Property

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GI-070 Goods

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GST/HST Information Sheets:  Harmonized Sales Tax:
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GI-060 Point-of-Sale Rebate on Newspapers

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GI-062 Point-of-Sale Rebate on Feminine Hygiene Products

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GI-063 Point-of-Sale Rebate on Children's Goods

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GI-064 Point-of-Sale Rebate on Prepared Food and Beverages

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GI-065 Point-of-Sale Rebate on Books

Ontario Ministry of Revenue

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Tax Savings for Families and Business - re cash payments

Ontario Newsroom

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Report estimates benefits of Ontario's tax plan

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More Point-Of-Sale Exemptions for Ontario's HST - November 12, 2009

 

Revised: March 02, 2014

 

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