Ontario HST, what does it mean for consumers

On July 1, 2010 Ontario will stop charging the 8% Provincial Retail Sales Tax (RST / PST) on goods and the 5% Goods and Services Tax (GST) will be replaced by a 13% Harmonized Sales Tax (HST).   In the case of purchasing goods, the only change will be a cosmetic change on the invoice; services which were not previously subject to GST only will have an increase in sales tax. There are other items consumers should be aware of as the HST is phased in.

Buy now and save!

Beginning on May 1^st, the Ontario portion of HST charged on services to be delivered after July 1, 2010 must appear on the invoice.  Where a service is currently subject to GST but not RST but will be after July 1^st, prepayment prior to May 1 of these services to be performed after July 1, may avoid the additional 8% tax.  Get to the golf course and buy your membership now.

Pay later and save?

Invoices and payments for services after July 1^st should only include HST on services provided after July 1^st.  Ensure you check your invoices for any projects which may have straddled July 1^st to ensure you haven’t been charged HST on the portion completed prior to implementation.

Bribes

In addition to the GST/HST credit that the federal government provides, the Province of Ontario has announced the Ontario Sales Tax Credit program. 

Qualifying individuals will receive a maximum credit of $260 for each adult and child in their family.  The credit is reduced by 4% of your adjusted net income in excess of $20,000 if you are single, or over $25,000 of family income if you are a single parent, married or living common law.   

The criteria for the OSTC is the same as the GST credit, provided that you are a resident in Ontario on the first day of the month preceding the payment.    Application for the OSTC is along with the GST/HST credit when you file your personal tax return and the benefit is non-taxable.

More bribes

The Ontario government has also announced the Ontario Sales Tax Transition Benefit.  The OSTTB will be paid to eligible Ontario tax filers in three tax-free instalments in June 2010, December 2010 and June 2011.  The maximum benefit is $300 for single people earning $80,000 or less and $1,000 for families earning a total of $160,000 or less.  There is a phase out of half the amount if a single person earns between $80,000 and $82,000 or families earning between $160,000 and $166,700, with no benefit in excess of those amount.  Application is automatic when you file your tax return.

Bribe madness!

New residential housing where ownership and possession is transferred after June 30th, with the exception of those with agreements signed prior to June 19^th, 2009, will be subject to HST.  Individuals can apply for an HST credit of 75% of the Ontario portion of the HST (6%) up to $24,000 ($400,000 of the purchase price).  There is no phase out of the credit on purchase prices in excess of $400,000.  The GST credit is also available.  There is a separate credit available in grandfathered agreements signed prior to June 19^th, 2009 with ownership and possession transferred after June 30, 2010.