Countdown to the HSTHosted by the Certified General Accountants Association of BC

T. Charlotte Hoggard, CGA

HST Transition

Tax Application

PST/ some HST October 14, 2009•Amounts paid or payable after• Certain businesses and PSBs must self-assess HST for

supplies on or after July 1,2010• Selling lifetime memberships - 25%• Large construction contracts and contracts >3months

PST/ HST May 1, 2010•Collect /pay HST for amounts paid or payable on or after this date for supplies on or after July 1, 2010

HST July 1, 2010 – BC HST

BC HST Transitional Dates

Point of Sale Rebates

BC

Books YesChildren’s sized clothing and footwear YesChildren’s car seats and booster seats YesFeminine hygiene products and diapers YesMotor fuels for motor vehicles, trains, boats, as well as aviation fuel

Yes

Residential energy Yes

Public Service Sector Rebates

Organization 5% GST BC 7% HST Ontario 8% HST

Municipality 100% 75% 78%

Universities & Colleges

67% 75% 78%

School Boards 68% 87% 93%

Hospitals 83% 58% 87%

Charities & Qualifying Non-profits

50% 57% 82%

• Point 1• Point 2• Point 3• Point 4

PST to HST TransitionBefore July 1, 2010 July 1, 2010

Goods - Delivered or ownership transferred

PST HST

Taxable Services PST on portion performed (if 90% or more all PST)•Prorated otherwise

HST on portion performed (no HST if =<10%) – or prorated

Lease of TPP PST on Lease interval that begins and ends before July 31

HST on lease interval beginning

Intangible personal property (e.g. intellectual property)

Generally HST on sale paid or payable; however, sometimes lease license rules apply

• Continuous supplies• Budget purchase arrangements• Direct sellers using alternate collection• Combined supplies

Special Transition Issues

Candace Nancke, CGA

HST Real EstateTransitional Rules

• Grandparented sales can be assigned in many situations, but not all

• Builder disclosure agreements after Nov. 1, 2009 and before July 1, 2010 – be careful

• Rental housing, owner built homes, resellers – rules are close but variations – be careful

Overview

• Some housing types do not qualify for grandparenting

• Grandparenting does not apply to all purchasers

Overview – Continued

Sale of New or Substantially Renovated Properties - Summary

Date ofAgreement

Date ofTitle Transfer*

Rate ofTax Due

BC New HousingRebate

(Table 1)

Transitional TaxAdjustment

(Table 2)

TransitionalNew Housing

Rebate(Table 3)

Single-Unit HomesNov. 18, 2009 or

before (grandparented)

After June 30, 2010 5% No Yes No

After Nov. 18, 2009 Before July 1, 2010 5% No n/a n/a

After Nov. 18, 2009 After June 30, 2010 12% Yes No Yes

* ownership and/or possession

HST/REBATE Quick Reference Table

Sale of New or Substantially Renovated PropertiesSummary

Date ofAgreement

Date ofTitle Transfer*

Rate ofTax Due

BC New HousingRebate

(Table 1)

Transitional TaxAdjustment

(Table 2)

TransitionalNew Housing

Rebate(Table 3)

CondominiumsNov. 18, 2009 or

before (grandparented)

After June 30, 2010 5% No Yes Yes - Claimed by Builder

After Nov. 18, 2009 Before July 1, 2010 5% No n/a n/a

After Nov. 18, 2009 After June 30, 2010 12% Yes No Yes - Claimed by Builder

* ownership and/or possession

HST/REBATE Quick Reference Table

• Unlike GST rebate, it is not reduced• Will be administered by CRA, similar to GST

rebate• Builders will have the option of providing the

rebate at the time of sale• A rental rebate has been proposed

BC New Housing Rebate

HST/REBATE Quick Reference TableBC New Housing Rebate (Table 1)

Type of Housing Rebate Rates & Factors*Price to Pay to Get

Full Refund

New Home with Land 71.43% of the Provincial component of HST $ 525,000

New Home with Leased Land 4.47% of the price attributable to the building $ 588,000

New Mobile or Floating Home 71.43% of the Provincial component of HST $ 525,000

New Co-Op Housing Unit 4.47% of the price paid for qualifying shares in the co-op $ 588,000

* maximum rebate in all cases is $26,250

• Paid by builder• Based on % of completion at July 1, 2010 –

documentation will be important

Transitional Tax Adjustment

HST/REBATE Quick Reference TableTransitional Tax Adjustment (Table 2)

Single - Unit HomesDegree of Completion or Substantial Renovation on July 1, 2010

Transitional Tax Adjustment Rate

Less than 10 % 2.00%10% or more but less than 25% 1.50%25% or more but less than 50% 1.00%50% or more but less than 75% 0.50%75% or more but less than 90% 0.20%90% or more 0.00%

Residential Condominiums

All Degrees of Completion on July 1, 2010Transitional Tax Adjustment

Rate

All grandparented sales Flat 2%

• Rebates for single unit homes can be claimed by builder or purchaser

• Rebates for residential condominiums must be claimed by builder

• Will be administered by CRA

Transitional New Housing Rebate

• Builder will require clearance certificate from the Province to claim

• Purchaser will require certificate of percentage of completion from builder (as at July 1, 2010)

Transitional New Housing Rebate – Continued

HST/REBATE Quick Reference TableTransitional New Housing Rebate (Table 3)

Two calculation methods for % of estimated PST:Floor Space Method - $60 per square meter of floor space in the home - apply after July 1, 2010Selling Price Method - 2% of the selling price - apply after sale complete

Transitional New Housing Rebate

Degree of Completion or Substantial Renovation on July 1, 2010 % of estimated PST claimed

Less than 10 % 0%10% or more but less than 25% 25%25% or more but less than 50% 50%50% or more but less than 75% 75%75% or more but less than 90% 90%90% or more 100%

John Pankratz, FCGA

HST Thresholds

Small Supplier Threshold

• The $30,000 small supplier threshold that currently exists under current GST provisions will continue

• Businesses with taxable supplies under the threshold amount can “voluntarily register”

Recapture of Input Tax Credits (RITC) – Large Business Threshold

• Affects “large businesses” making taxable supplies more that $10 million annually and certain financial institutions

• Based on taxable supplies made in the last fiscal year • Restricts Input Tax Credit claim on the provincial

portion of HST paid on certain expenditures (BCVAT)

Property/Services Subject to RITC

Specified road vehicles• Motor vehicle licensed for use on public roadways

with weight less than 3,000 kg• Applies to parts and services in respect to specified

road vehicles• Does not apply to routine repairs or maintenance of

a specified road vehicle

Property/Services Subject to RITC (cont.)

Specified energy• Generally includes electricity, gas, fuel and steam• Does not apply to energy used by producers used

directly in the production process and farmers• Does not apply to convention use• Optional “production proxy” method based on North

American Industry Classification System (96%/87%/70%)

Property/Services Subject to RITC (cont.)

Specified Telecommunication Services• Generally applies to telephone, television,

fax/email, audio and computer link-ups• Does not apply to internet access services,

web-hosting services, toll-free telephone services or convention use purposes

Property/Services Subject to RITC (cont.)

Specified Meals and Entertainment• Applies to food, beverages and entertainment that are

subject to the existing 50% ITC restriction under the ETA

• Does not apply to “re-supply” situations, events where all employees from a location are invited, or expenses included in an employees income as taxable benefits

RITC Reporting

• Large businesses will be required to report “Gross ITCs” and RITC in separate input fields on future GST/HST returns

• Option to use Estimation/Installment/Reconciliation approach to reporting RITC amounts

RITC Phase Out

RITC system will apply as follows:• 100% - July 1/10 to June 30/15• 75% - July 1/15 to June 30/16• 50% - July 1/16 to June 30/17• 25% - July 1/17 to June 30/18• 0% after July 1/18

Other HST Thresholds

• Electronic filing of GST/HST returns - $1.5 M• BC HST New Housing Rebate (7% - 2% x

purchase price) maximum $525,000 (max. rebate $26,140)

Questions?