Ontario Harmonized Sales Tax (HST)


 WHAT IS HST?

HARMONIZED SALES TAX is a proposal to combine the 8% Ontario PST and the 5% GST into one 13% HST that will be administrated by the federal government starting July 1, 2010.

WHAT WILL THIS MEAN FOR US?

For Consumer, it will mean higher costs for item that were previously PST exempt (hair cuts, gym memberships, services etc).

HOW WILL THIS HELP THE CURRENT ECONOMIC SITUATION?

With the implementation of HST the government will provide tax breaks to businesses. The government believes that harmonization will lower the tax burden on provinces and improve business competitiveness in the province. The government will also lower business taxes which will ultimately lead to lower prices of goods.

HOW IS THAT POSSIBLE?

Under the current system businesses pay PST on machinery, raw material, direct costs, office supplies and other goods. This additional 8% cost is eventually passed along to consumers as companies cannot offset this addition as the GST. Harmonization extends these tax credits to the provincial part of the tax and companies will be be able to request a credit of 13% of the additional charge. The end result is lower production costs and more money to spend on machinery, equipment and other business development opportunities.

ARE THERE ANY EXEMPTIONS?

Yes, the following items are exempt from the HST.

  • Books.
  • Children's clothes & footwear.
  • Children's diapers, car seats and booster seats.
  • Feminine & Hygiene products.
  • Prepared foods unders $4.
  • Print Newspapers.
  • As under the current federal GST, the HST will not be charged on items such as basic groceries, prescription drugs and medical devices.

ARE ANY BIG TICKET ITEMS EXEMPTED?

The province is offering a rebate of 75% on the first $400,000 of the purchase price of a new home. This would provide a rebate of up to $24,000 for new homes across all price ranges.

GOVERNMENT IS CALLING THIS A REVENUE NEUTRAL MOVE, IS THAT TRUE?

Currently Ontarions have mixed feelings about the harmonization. The government will make three cash payments totalling $1000 to families earning less than $160,000 and payments of $300 for individuals earning less than $80,000 annually. The province will also drop personal income tax rates and offer ongoing tax credits to low-income families worth $260 annually to those who qualify.

WHEN WILL I RECEIVE THESE PAYMENTS?

  • 1st Payment: June 2010.
  • 2nd Payment: December 2010.
  • 3rd Payment: July 2010.

WHAT KIND OF TAX RELIEF CAN I EXPECT?

The government will cut Income Tax as follows:

Taxable Income: $0-$36,848 current: (6.05%) 2009.
Proposed: (5.05%) 2010.
 
Taxable Income: $36,848-$73,698 current: (9.15%) 2009.
Proposed: (9.15%) 2010.
 
Taxable Income: > $73,698 current: (11.16%) 2009.
Proposed: (11.16%) 2010.

For more information on this tax and how it will affect your business call us today.

 

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