Accountant Toronto (CGA) Certified General Accountant Corporate | Small Business | Personal | Income Tax | Consultation
Newsletter #8 - June 2010
Dear Client or Future Client,
I hope that this newsletter finds you well as we all look forward to spending time with family and friends during the
summer months.
On July 1st, the HST comes into effect in Ontario. This newsletter will be outlining how the HST will affect you, as a
business owner, and affect you, as a consumer.
How HST Affects You as a Business Owner
And You as a Consumer
The old retail sales tax RST, or PST as it was commonly referred to, paid by business owners on items that they did not typically resell to consumers, such as furniture and equipment, office/store supplies, shelving, computers, cash registers and telecommunications, used to be hidden in the price charged to their consumers
Consumers would pay this hidden cost, plus the old retail sales tax on top of that
If the old retail sales tax wasn’t hidden and passed on in the price to consumers, then it was written off as an expense claimed by the business owner when the income tax return was filed
The business owner would only get a percentage of the old retail sales tax back based on the income tax rate of the business
Now business owners don’t have to pass on this hidden cost to consumers, or get a partial recovery of the old retail sales tax from their income tax return, as they can get a full 100% recovery of the HST paid on all their expenses, dollar for dollar, by claiming it on their GST/HST sales tax return
The HST is then effectively recovered from the government, not the consumer
These savings by businesses and consumers in Ontario should stimulate the economy
There is no separate registration system for the HST: when a business is registered for GST, the business is automatically registered for HST
If a business has annual revenue of less than $30,000 then that business is not compelled to register for GST/HST, and therefore not charge and collect GST (5%) /HST (8%) from customers
The GST/HST on expenses paid by businesses that are not registered for GST/HST would be claimed on the business income tax return for a partial recovery of these sales taxes paid
A business can voluntarily register for GST/HST if it has annual revenue of less than $30,000; this would be a good idea if the business has made substantial cash outlays for equipment and would like to recover 100% of the GST/HST on a dollar for dollar basis, instead of claiming it for a partial recovery on the income tax return of the business
For many of the things that consumers buy, like basic groceries, drugs and medical devices, clothing and electronics, there will be no change in sales tax with HST
The sales tax on some goods and services will increase – including things like gas, electricity and personal and professional services such as haircuts, legal and accounting fees
