On July 1, 2010 the HST or Harmonized Sales Tax will go into effect in British Columbia and Ontario, Canada. Are you ready?

Summary:

    * On July 1st 2010, the Provincial Sales Tax (PST) and the Federal Goods and Service Tax (GST) will be replaced by a single unified tax, the HST or Harmonized Sales Tax.
    * HST is administered federally. In British Columbia, the rate is 12%; for Ontario, the rate is 13%.
    * HST is new for Ontario and British Columbia but follows similar “tax blending” initiatives already in place in Nova Scotia, New Brunswick, Newfoundland and Labrador, and countries around the world.

Benefits for small businesses:

    * Input Tax Credits (ITCs) will reimburse many of your business purchases that were PST-exempt but now attract HST.
    * These savings on your business costs may make your business more competitive.
    * Time and expense savings by unified remittances.

Impact for small businesses:

    * PST exempt goods and services will have to adjust to a higher tax - e.g. Professional and personal services such as Personal Chef Services
    * Be aware of several key rules, e.g. as of May 1st 2010, the HST is applicable to taxable goods and services that will be delivered AFTER July 1st 2010.

More information:

    * CFIB: http://www.cfib-fcei.ca
    * BC Government: http://www.gov.bc.ca/hst/
    * Ontario Ministry of Revenue: http://www.rev.gov.on.ca/en/taxchange/index.html
    * Canada Revenue Agency: http://www.cra-arc.gc.ca/harmonization/

Important steps:

    * Figure out the impact of HST on your budget and plan your corporate spending accordingly.
    * Plan an update of sales equipment, websites, brochures etc.
    * Update your purchasing and accounting software, including accounts payable, tax credit and taxable benefits calculations, invoicing, and expense spreadsheets.
    * Up-to-date tax management software will eliminate errors and avoid potential confusion.

This article has been prepared as a guide only.  Please contact your accountant for full details.