Department of Finance, Proposed Amendments to the Excise Tax Act

This document released by Canada’s Department of Finance provides details of proposed amendments to the Harmonized Sales Tax (“HST”) place of supply rules, the self-assessment and rebate rules and the imported taxable supply rules, related to the provincial component of the HST.  These proposed amendments will help to ensure that the GST/HST legislation functions properly in light of the sales tax harmonization announced by both Ontario and British Columbia and any future harmonization that may be declared by a province currently administering a retail sales tax.

Specifically, these proposed rules more accurately determine the place of supply and the rate at which suppliers must charge the provincial component of the HST on their supplies of taxable property and services in Canada.  These amendments were required as many of the current HST place of supply rules for property and services rely on the location of the supplier to determine whether a sale is subject to the provincial component of the HST.  These amendments propose that the HST place of supply rules for intangible personal property and services be changed so that there is less emphasis on the supplier’s location and greater emphasis on where the purchaser of the intangible or service is located.  These changes will also help to accommodate different rates of the provincial component of the HST that a province may adopt if it chooses to harmonize its retail sales tax with the GST.  The place of supply rules for tangible personal property, real property and personal services will not be affected by these proposed amendments.

Additionally, this announcement contains proposed changes to the rules that, in certain situations, require self-assessment of the provincial component of the HST on property or services where they are brought into a province for consumption, use or supply or rebates of the provincial component of the HST on property or services where they are acquired in a province for consumption, use or supply outside that province.  

Note that Technical Information Bulletin B-103 was revised June 3, 2010 to incorporate changes to the HST place of supply rules for services and intangibles that were reflected in the draft regulations released by the federal Department of Finance on May 1, 2010.

Finance Amendments – Place of Supply Rules
CRA Technical Information Bulletin B-103 revised