News and Insights

Ontario Information Notice No. 1, “Single Sales Tax”

Tax Development Oct 09, 2009

Ontario has recently issued this notice to provide further details on the proposed move to a single value-added tax, effective July 1, 2010, as outlined in the 2009 Ontario budget.As announced in the budget, a point-of-sale rebate for the provincial portion of the tax will be available for books; children’s clothing and footwear; children’s car seats and car booster seats; diapers; and feminine hygiene products. The notice clarifies that the rebate for books will also extend to audio books, where all or substantially all of the book is a spoken reading of a printed book.

Furthermore, the budget also announced that, on a temporary basis, large businesses and financial institutions would be unable to claim input tax credits on the provincial portion of the tax on certain inputs used in their commercial activities. However, the restrictions will not apply to goods or services acquired solely for the purposes of resupply by a large business.

Generally admissions over $4 to places of amusement in Ontario are currently subject to retail sales tax at a rate of 10 per cent and GST at a rate of 5%, for a total combined rate of 15 per cent. With the implementation of the single sales tax, the rate will decrease to 13 per cent, resulting in a decrease in the tax rate of 2 per cent on most admissions.

Additional information will be released in the near future to help taxpayers and businesses prepare for the proposed changes.