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Getting Ready For Hst


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Presented at the 2010 BCCA/FCC Conference at Stillwood Camp and Conference Centre, Chilliwack BC.

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Getting Ready For Hst

  1. 2. <ul><li>HST Basics </li></ul><ul><li>HST on the Revenue side </li></ul><ul><li>HST on the Expense side </li></ul><ul><li>Checklist for preparing </li></ul><ul><li>Where to go for more information </li></ul><ul><li>Questions? </li></ul>
  2. 3. <ul><li>HST…by Google </li></ul><ul><ul><li>Hubble Space Telescope </li></ul></ul><ul><ul><li>Harry S. Truman </li></ul></ul><ul><ul><li>Hawaii Standard Time! </li></ul></ul><ul><ul><li>Health Sciences & Technology </li></ul></ul><ul><ul><li>Helicopter Support Teams </li></ul></ul><ul><ul><li>Harpers Special Tax </li></ul></ul><ul><ul><li>....Harmonized Sales Tax – moving to an integrated single tax </li></ul></ul>
  3. 4. <ul><li>12% Combining PST & GST tax to create a single sales tax </li></ul><ul><ul><ul><li>Merging PST 7% plus GST 5% </li></ul></ul></ul><ul><ul><ul><li>BUT…HST will apply to things that PST did not apply to </li></ul></ul></ul><ul><ul><ul><li>BUT…you will get input credits for HST (for the PST too!) you did not previously get </li></ul></ul></ul><ul><ul><ul><li>AM I GOING TO BE AHEAD OR BEHIND??? </li></ul></ul></ul>
  4. 5. <ul><li>… if it had GST before…it now has HST. </li></ul><ul><ul><ul><li>Continues the GST principles – goods and services are: </li></ul></ul></ul><ul><ul><ul><ul><li>Zero-rated </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Taxable </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exempt </li></ul></ul></ul></ul><ul><li>… if it got a GST input tax credit before…it gets an HST input tax credit now </li></ul><ul><ul><ul><li>The extra HST provides more input tax credit </li></ul></ul></ul><ul><ul><ul><li>The PST you paid before now part of input tax credit </li></ul></ul></ul>
  5. 6. <ul><li>GST 5% now HST 12% </li></ul><ul><ul><li>Review current revenues with GST </li></ul></ul><ul><li>Pricing concerns for end users </li></ul><ul><li>Update Forms </li></ul><ul><ul><li>Receipts, Invoice Templates, Rental Forms, Contracts, Brochures, Price lists </li></ul></ul><ul><li>Charities </li></ul><ul><ul><li>special net tax method...remitting 60% of HST & keeping keeping 40% of 12% HST rather than 5% GST </li></ul></ul>
  6. 7. <ul><li>Increased expense of 7% on items </li></ul><ul><li>previously only incurring GST </li></ul><ul><ul><ul><li>Maintenance/Janitorial services </li></ul></ul></ul><ul><li>Rebate of 57% of the 7% charged on all the ‘PST portion’ of HST. </li></ul><ul><ul><ul><li>Rebate on new tax being paid but also get rebate on PST you were paying before </li></ul></ul></ul><ul><li>Analyze net impact – </li></ul><ul><ul><ul><li>what expenses have GST? GST & PST? Neither? </li></ul></ul></ul><ul><li>Set up tracking for HST paid – </li></ul><ul><ul><ul><li>Systems need to track GST/HST portion & PST/HST portion </li></ul></ul></ul><ul><li>Purchases from out of province? </li></ul><ul><li>Update forms – expense forms, mileage, others? </li></ul>
  7. 8. <ul><li>July 23, 2009 – BC Govt announces HST </li></ul><ul><li>October 14, 2009 – Transitional rules announced and implemented </li></ul><ul><li>May 1 2010 – HST applies to consideration that becomes due or is paid on or after this date, for property and services provided on or after July 1, 2010 </li></ul><ul><ul><ul><ul><li>In addition, the HST would generally apply to prepayments starting on May 1, 2010, for goods or services that would be provided on or after July 1, 2010 </li></ul></ul></ul></ul><ul><li>July 1 2010 – HST applies to goods and services </li></ul>
  8. 9. <ul><li>Specific rules regarding treatment of some items for the transition year - examples </li></ul><ul><ul><ul><ul><li>Subscriptions – HST not applicable if paid before July 1 2010 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Passenger transportation services – not apply for a continuous journey commenced before July 1 2010 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Generally, the HST would be charged on a purchase where payment is made or becomes due after April 2010 but delivery of the goods or service is made on or after July 1, 2010 </li></ul></ul></ul></ul><ul><li>Check your contracts, leases and other </li></ul><ul><li>agreements that cross over July 1 </li></ul><ul><li>Confirm your interpretation! </li></ul>
  9. 10. <ul><li>The vendor automatically credits the provincial part of the HST and only collects the 5% federal part of the HST payable on the sale of specified items </li></ul><ul><ul><ul><li>Children’s clothing, footwear, diapers, car seats, booster seats... Note - clothing that is CHILD sized is HST(PST) exempt (was age restricted before) </li></ul></ul></ul><ul><ul><ul><li>Books </li></ul></ul></ul><ul><ul><ul><li>Motor fuel </li></ul></ul></ul><ul><li>Choices for showing on receipts... </li></ul>
  10. 11. <ul><li>Can show receipt with tax and then rebate </li></ul><ul><ul><li>$100 + $12 tax - $7 rebate = $105 </li></ul></ul><ul><li>Can show receipt as 5% HST only – </li></ul><ul><ul><li>$100 + $5 tax = $105 </li></ul></ul><ul><li>Can show receipt as 5% HST tax included – </li></ul><ul><ul><li>$105 tax included </li></ul></ul><ul><ul><li>Your choice – but impact for your </li></ul></ul><ul><ul><li>pricing, presentation, price lists and </li></ul></ul><ul><ul><li>software program abilities </li></ul></ul>
  11. 12. <ul><li>Do the work on Impact for you -cashflow too! </li></ul><ul><li>Review revenues – what do you charge GST on now? </li></ul><ul><li>Review expenses - What PST do you currently pay? What will you now have to pay? </li></ul><ul><li>How much HST will you recover ? </li></ul><ul><li>Changes for Pricing impacts and decisions ? </li></ul><ul><li>Transition issues – review projects or services straddling July 1 implementation ? </li></ul>
  12. 13. Revenues Gross GST Now HST Consumer cost Residential Camp 100,000 5,000 12,000 112,000 Rentals 20,000 1,000 2,400 22,400 Transportation 10,000 500 1,200 11,200 Tax Charity 40% 2,600 6,240 Expenses Cost Prev With Tax Now With Tax Prev ITC 50% GST Now ITC 50% HST Wages 50,000 50,000 50,000 None None Supplies 40,000 44,800 44,800 1,000 2,400 Janitorial services 20,000 21,000 22,400 500 1,200
  13. 14. <ul><li>IT systems – </li></ul><ul><ul><li>Software updates or patches? Software setup of tax rates, impact to existing registrations? Testing! </li></ul></ul><ul><ul><li>Handling refunds or credits/returns under old rates </li></ul></ul><ul><ul><li>Table setup and review items for correct tax setup </li></ul></ul><ul><ul><li>Receipting options and display </li></ul></ul><ul><li>Accounting systems – </li></ul><ul><ul><li>check your tracking setup </li></ul></ul><ul><ul><li>Add new systems codes to track HST charged, HST (PST) paid and HST(GST) paid </li></ul></ul><ul><ul><li>POS rebate treatment </li></ul></ul>
  14. 15. <ul><li>Canada Revenue Agency – </li></ul><ul><li>Free Information seminars – Feb 11, Mar 4, Mar 26 </li></ul><ul><li>Bulletins - January 2010 – just released “Transition </li></ul><ul><li>to the HST – Services” </li></ul><ul><li>BC Government – / </li></ul><ul><li>Final PST remittances and basic background </li></ul><ul><li>Your Accounting firm – guidance, articles and interpretation </li></ul><ul><li>Including info: </li></ul><ul><li>Excise Tax Act </li></ul><ul><li>Place of supply rules </li></ul><ul><li>Transitional rules </li></ul><ul><li>Self assessment rules </li></ul><ul><li>BC Specific rules </li></ul>
  15. 16. <ul><li>Will the Hotel Room Tax (HRT) still be applicable? </li></ul><ul><li>As of July 1, 2010, the existing BC HRT would generally cease to apply to a supply of short-term accommodation for the part of the lease interval that is on or after July 1, 2010 However, the HRT would apply if the lease interval begins before July 2010 and ends before July 31, 2010. </li></ul><ul><li>The additional 2 per cent hotel room tax for municipalities and regional districts will be extended until June 30, 2011. It will not be discontinued with the implementation of the HST. </li></ul>