HST Transition Rules

On October 14, 2009, the Ontario Ministry of Finance released Information Notice #3 (the “Ontario Notice”) outlining the general transition rules in support of its implementation of the Harmonized Sales Tax (HST). The HST is scheduled to come into effect on July 1, 2010 subject to legislative approval.

The Ontario Minister of Finance released a bulletin to briefly address particular issues and questions related to the transitional rules with the intention of illustrating how these rules may impact your business and to provide you with information on what you need to do to prepare your business for the implementation of the HST and the winding down of the current Provincial Sales Tax (PST).

Key Dates

The transitional rules will operate based on four key dates.

  • July 1, 2010 – Implementation of the HST in Ontario.
  • May 1, 2010 – The HST will have to be collected on amounts that are paid or become payable on or after May 1, 2010, for goods or services provided on or after July 1, 2010.
  • October 14, 2009 – This is the date of Ontario’s Notice with respect to certain transitional rules. Certain businesses and public service bodies (non- profits organizations, charities, municipalities, schools, hospitals, etc.) may be required to self-assess the Ontario component of the HST (OHST of 8%) on amounts paid or payable after October 14, 2009 and before May 2010 for goods or services provided on or after July 1, 2010.
  • October 31, 2010 – This is the date on which any outstanding PST becomes payable under the transitional rules to ensure an efficient wind-down of the PST. Practically, the Ontario PST regime will cease to exist on October 31, 2010.

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