GST HST Changes
| As you are no doubt aware, the provinces of British Columbia and Ontario are both restructuring the application of their provincial sales tax regimes effective July 1, 2010. Both provinces are adopting a “Harmonized Sales Tax” (HST) whereby the prevailing provincial sales tax will be added to the Federal Goods and Services Tax and the combined total will be assessed as ONE tax where applicable. Generally, this new “Harmonized Tax” will apply to a much broader base of products and services that are purchased. Many “services” which were previously exempt from the application of provincial sales taxes in either British Columbia or Ontario will now be subject to the new Harmonized Taxes; transportation freight charges is one such affected application. The introduction of these two new Harmonized Sales Taxes – which have different tax rates – has compounded the confusion that already existed with the application of taxes in our industry. This is especially true when goods are being shipped between provinces/territories that have differing tax rates and structures. But generally speaking, when freight is being shipped between different jurisdictions it is the tax structure at the destination of the shipment that determines which tax rate is to apply. We have attempted to simplify the applicable tax application in the accompanying chart. To determine the correct sales tax that will apply to a shipment within Canada, locate the origin province in the far left column of the chart, then locate the destination province along the top row of the chart. Where these intersect you will find the applicable sales tax application for the freight charges on the shipment. There is a legend at the bottom of the chart that will further explain the tax application. Please note that there have been no changes to the tax structures that apply on goods moving directly to or from a foreign country – including United States. These shipments are still “zero rated” meaning that they are exempt from the application of all current sales taxes. |