The Honourable Graham Steele, as Finance Minister, presented his second Nova Scotia budget on April 6, 2010. A key intent of the 2010-2011 budget is the development of a plan to return the province to a balanced budget within four years. This plan includes a significant commodity tax change related to the HST in Nova Scotia.
HST Rate Increase
As part of this year’s budget, the Nova Scotia government has entered into a new Comprehensive Integrated Tax Coordination Agreement with the federal government that will increase the rate of HST in the province. Highlights of the new agreement are as follows:
- Effective July 1, 2010, the rate of the provincial component of the HST will increase by 2 per cent, from 8 per cent to 10 per cent resulting in the HST in Nova Scotia returning to the rate of 15 per cent (comprised of GST at 5 per cent and a provincial component of 10 per cent). It is anticipated that this tax change will generate additional revenue for the province in the 2010-2011 of roughly $215 million. This revenue increase is expected to be in the neighbourhood of $300 million in the following years.
- Nova Scotia will also introduce point-of-sale rebates on a number of essential family purchases. These point-of-sale rebates will apply to purchases of diapers, children’s clothing, children’s footwear and feminine hygiene products, and effectively remove the provincial portion of the HST from purchases of these items.
- Finally, the Nova Scotia sales tax on purchases of used motor vehicles and other designated personal property (e.g., aircraft, boats and boat trailers) will be increased from the current rate of 13 per cent to 15 per cent, coinciding with the HST increase on July 1, 2010.
In conjunction with this budget announcement, the Nova Scotia Department of Finance has issued a document containing the transitional rules for the Nova Scotia HST rate increase that is proposed to take effect on July 1, 2010. This document identifies a number of key dates that will be critical for transitioning to this new HST rate in Nova Scotia. These dates and their relevance to the transition are summarized below:
April 6, 2010 – Announcement date
Nova Scotia officially announced its intention to increase the HST rate in effect in the province to 15 per cent. Consideration for a supply made in Nova Scotia that is paid or becomes due on or before this date will not generally be subject to the new rate of HST. However, self-assessment of the 2 per cent difference in the HST rates may be required for certain public service bodies and other organizations (i.e., those not involved exclusively in commercial activities) on any consideration that is paid or becomes due after April 6, 2010 and before May 1, 2010, where the supply is for services or certain property provided by way of lease, licence or similar arrangement made on or after the implementation date.
May 1, 2010 – Pre-implementation date
Consideration for a supply of a service or certain property provided by way of lease, licence or similar arrangement made in Nova Scotia that is paid or becomes due on or after this date will generally be subject to HST where the actual supply of the service or property is made on or after the implementation date.
July 1, 2010 – Implementation date
This is the date on which most supplies of goods and services made in Nova Scotia will become subject to proposed increased rate of HST equal to 15 per cent.
Further information on these transitional rules can be found on the Nova Scotia Department of Finance web site at:
Nova Scotia HST Transitional Rules
Further details on Nova Scotia’s 2010-2011 budget are available from the province’s web site at:
Nova Scotia Budget Documents