As many of you know, the new Harmonized Sales Tax (HST) will take effect in Ontario July 1, 2010. The HST rate will be 13%, consisting of a 5% federal part and an 8% provincial part. For businesses, this new blended tax is expected to simplify recording and reporting processes for taxes.
As a result of the implementation date, for 2010 and only 2010, some transition rules apply. To help you better understand how these rules will apply to your business, we are providing the following interpretations.
Payments “in-full” Received before the implementation date of July 1, 2010:
Before May 1, 2010: If a guest has paid you “in-full” before May 1, 2010 for a trip that will occur after July 1, 2010 the current GST and/or PST tax rules apply.
After May 1, 2010 and before July 1, 2010: If a guest pays you “in-full” after May 1, 2010 and before July 1, 2010 for a trip that will take place on or after July 1, 2010, HST will apply to the total cost of the trip.
How to apply the tax on trips that begin before July 1 and end after July 1, 2010 if the guest pays you after May 1, 2010
If a guest books a trip at your tourism operation on dates that straddle the July 1, 2010 implementation date you will need to prorate your package. Any part of the trip that occurs before July 1, 2010 will need to be taxed using the current GST and/or PST rates. Any part of the trip that occurs on or after July 1, 2010 will be taxed at the HST rate.
We have put together this information based on an interpretation prepared by the Canada Revenue Agency - Excise and GST/HST Rulings Directorate. For more information on the transition rules you can visit: http://www. cra-arc.gc.ca/E/pub/gi/gi-059/gi-059-e.html
This article was taken from page 12 of NOTO's "The Outfitter" publication, Spring 2010 Issue