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Canada Expected to See Five New HST Rates by July 1, 2010

21/04/2010


In an effort to reduce Nova Scotia’s deficit to a sustainable level, the province’s NDP Government will increase the harmonized sales tax (HST), effective July 1, 2010. The HST rate hike from 13% to 15% will make it the highest combined provincial and federal tax rate in Canada. As of July 1, 2010, businesses can expect to see five HST rates in Canada -- 0%, 5%, 12%, 13%, & 15%. This will likely have some implications to many unsuspecting businesses in Canada engaged in inter-provincial transactions. May 1, 2010 is when the transitional rules come into effect and many businesses will have less than three weeks to get prepared. Coupled with the new place of supply rules (which have undergone some significant changes), many businesses will face challenges in determining the correct rate of HST for various transactions. Businesses will not only need to re-program all their systems before May 1, 2010, they will also need to take into account the five HST rates. In order to ensure compliance, every business needs to understand how the place of supply rules will affect the rate of HST that needs to be charged.

To find out more, please contact myself, any member of MNP’s Indirect Tax Services Team or contact a local MNP advisor.