On October 14, 2009, the provinces of Ontario and British Columbia released notices outlining the proposed general transitional rules that will govern the implementation of a harmonized sales tax (“HST”), effective July 1, 2010, in each province. The notices also provide information on the winding down of Ontario’s Retail Sales Tax and British Columbia’s Social Service Tax and Hotel Room Tax. For the most part, the proposed transitional rules issued by both provinces are identical, although some differences – mainly attributable to unique aspects of each retail sales tax currently in place – do exist between the two jurisdictions.
In summary, the proposed transitional rules issued by these provinces will be based on the general timing of liability rules found in the Excise Tax Act. Under these rules, HST on the consideration for a supply is payable on the earlier of the day payment is made and the day the supplier issues an invoice. The payment terms on an invoice are irrelevant. However, if there is an undue delay in issuing an invoice, HST becomes payable when the invoice would have been issued if there had been no delay. In addition, if either the date of an invoice or the payment date under a written agreement is earlier than the date on which the invoice is issued, HST becomes payable on the earlier date.
These documents also identified a number of key dates that will be critical to the transition to the HST in each of these provinces. These dates and their relevance to the transition are summarized below:
October 14, 2009 – Announcement date
Ontario and British Columbia “officially” announce proposed transitional rules for the implementation of HST in their provinces. Consideration for a supply made in either of these provinces that is paid or becomes due on or before this date will not generally be subject to HST. Self-assessment of HST may be required by a Public Service Body and certain other businesses on consideration that is paid or becomes due between October 15, 2009 and April 30, 2010 where the actual supply is made on or after the implementation date.
May 1, 2010 – Pre-implementation date
Consideration for a supply made in either province that is paid or becomes due on or after this date will generally be subject to HST where the actual supply is made on or after the implementation date.
July 1, 2010 – Implementation date
Date on which most supplies of goods and services made in Ontario and British Columbia will become subject to HST.
October 31, 2010 – Cut-off date (Ontario only)
Date on which Ontario Retail Sales Tax becomes payable on supplies made prior to July 1, 2010 where the consideration has not been paid or become due prior to the cut-off date.
We will be releasing further details on these proposed HST transitional rules in the upcoming weeks. In the meantime, additional information about these rules can be obtained by contacting our Senior Tax Advisors on our Ryan TaxDirect ® line at 1-800-667-1600.
Further information on each province’s proposed HST transitional rules can also be found at the following links:
ON Information Notice - Proposed HST Transition Rules
BC Notice - Proposed HST Transition Rules
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