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Newfoundland and Labrador's HST Rate to Remain at 13%


Note: This post was written by Diana Spagnuolo, Senior Manager, Indirect Tax

​UPDATE: On December 14, 2015, the government of Newfoundland and Labrador announced that the federal government has agreed to cancel the HST rate increase. The HST rate in Newfoundland and Labrador will remain at 13%

​ Earlier this year with Budget 2015, the Government of Newfoundland and Labrador had announced the raising of the provincial component of the HST, resulting in an HST rate increase from the current 13% to 15% rate.

The increase was to be enacted in regulation, effective January 1, 2016.

However, the new Premier-designate Dwight Ball just recently announced the intention to rescind the rate increase, keeping the HST rate @13%.

As this recent announcement fulfills the new Liberal party platform that had promised to rescind the increase, it is now uncertain whether the rate change will move forward or not.​

We anticipate further details expected to be issued within the next few weeks, following the swearing in of the new government.

It is noteworthy to mention that this announcement was made at the provincial level, whereas the administration of the HST is performed at the federal level, by the Canada Revenue Agency.

Within a federal- provincial agreement, called the Comprehensive Integrated Tax Coordination Agreement (CITCA), the agreement allows the province to change the tax rate applied to the provincial portion of the tax once, in any twelve-month period.

It is questionable whether the province may rescind the tax rate change announced by the previous governing party at this late hour.

As a rate change involves much effort; typically entailing a client’s review of all systems / changes required for all business areas and divisions, including internal and external communications and notifications, it would be best for the province to communicate the enactment or rescinding of the expected rate change, at their earliest opportunity.

For more information on this rate change, contact Diana Spagnuolo, MBA, CPA, CGA, Senior Manager, Indirect Tax, at 647.943.4036 or Heather Weber, Business Advisor, Indirect Tax, at 250.979.2575 or [email protected], or your local MNP Tax Advisor.