Public Sector - Ontario Sales Tax Changes

Written by Tom Danaher

Reply to Tom by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

[Originally posted - December 2009]

Given the nature of activities carried on by public sector bodies (PSB’s), charities and not for profit organizations (NPO’s), there are elements of the HST that are unique to these entities. Due to the expansion of the tax base, the cost of some goods and services will increase despite the availability of partial rebates for the provincial component of the HST. The impact of the changes will depend on your particular situation.

Key Dates

Transitional rules for the HST implementation specify a number of key dates with respect to requirements in accounting for the Ontario component of the HST and the winding down of the PST:

October 15, 2009 to April 30, 2010: PSB’s, Charities and NPO’s engaged in GST/HST exempt activities will be required to self-assess the provincial component of the HST on consideration that becomes due or is paid in this period for goods and services supplied after June 30, 2010.

May 1, 2010: HST will generally apply to consideration that becomes due or is paid after April 30, 2010 for goods and services supplied after June 30, 2010.

July 1, 2010: HST will apply to consideration that becomes due or is paid on or after July 1, 2010.

October 31, 2010: This date marks the wind-down of the Ontario PST system. Any PST that has not been paid or become payable by this date will be deemed to be payable on October 31, 2010.

GOODS AND SERVICES SUPPLIED BY PSB’S, CHARITIES AND NPO’S

PSB’s, charities and NPO’s will charge an additional 8% for the provincial component of the HST for taxable goods and services supplied in Ontario effective July 1, 2010

Generally, supplies that are taxable under the federal GST will be subject to the HST at a combined rate of 13% (5% federal, 8% provincial)

The transitional rules provide that some supplies will require that HST be charged proportionately for goods and services straddling July 1, 2010. For example, for membership fees covering the period June 1, 2010 to May 31, 2011, HST will apply at 11/12 of the HST representing the period covered from July 1, 2010

Membership fees that are due before May 1, 2010 will not attract HST even if they cover a period straddling July 1, 2010

HST does not have to be charged on conference and seminar registration fees paid before May 1, 2010

Magazine and other subscriptions paid prior to July 1, 2010 would not attract HST even if the subscription period covers a period after June 30, 2010

REBATES

Due to the differences in rebate rates between the federal GST and the provincial HST, PSB’s, Charities and Qualifying NPO’s will have to be aware of both the federal and provincial components of GST/HST in accounting for rebates. Outlined below are the rebate rates that will apply to PSB’s, Charities and Qualifying NPO’s:

Entity	Federal GST Rebate Rate	Ontario Component HST Rebate Rate
Municipalities	100%	78%
Universities and Colleges	67%	78%
Schools	68%	93%
Hospitals	83%	87%
Charities and Qualifying NPO’s	50%	82%

SELF-ASSESSED HST PRIOR TO MAY 1, 2010

For supplies of goods and services made after July 1, 2010 that involved consideration due between October 15, 2009 and April 30, 2010, PSB’s, Charities and NPO’s will be required to self-assess the provincial portion of the HST. For GST registrants, the provincial portion of the HST will be reported on your GST/HST return for the reporting period that includes July 1, 2010, provided the return is due before November 1, 2010. In any other case, the amount is to be reported in prescribed form before November 1, 2010.

WE CAN HELP

The proposed Ontario HST presents unique challenges to PSB’s, Charities and NPO’s. Although the implementation date is July 1, 2010, some transactions are now implicated. We can assist in planning and ensuring that your organization has made the necessary modifications to systems and routines to accommodate the HST implementation and related transitional issues.

Tom Danaher, CMA is an Associate with OTUS Group, specializing in the area of Commodity Tax. You can contact Tom at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Last Updated on Friday, 15 January 2010 11:36

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