The Canada Revenue Agency has continued to issue info sheets regarding the upcoming implementation of HST in Prince Edward Island (“PEI”), effective April 1, 2013. The info sheets summarized below clarify the application of GST and HST to transactions straddling the April 1, 2013 implementation date.
GI-135, “PEI Transition to the HST – Services”
For services deemed to be made in PEI, where more than 90% of a service is performed before April 1, 2013, only GST would apply to the payment.
If more than 10% of a service is performed after April 1, 2013, only GST would apply to any payment made on or before November 8, 2012. Payments after this date and up to January 31, 2013 would also be GST-applicable. However, there may be a need to self-assess the provincial component of the HST for a sole proprietor, a partnership, a corporation, an organization, a public service body, or any other entity, and, in certain conditions, a non-consumer. Payments from February 1, 2013 onwards are subject to a pro-ration for GST and HST based on the portion of the service provided before and after the transition date of April 1, 2013.
This document includes useful appendices, including one with a flowchart that illustrates the general transitional rules for services during this transitional period.
GI-136, “PEI Transition to the HST – Intangible Personal Property”
When an amount for the sale of intangible personal property (“IPP”) becomes due (or is paid without having become due) before April 2013, only the GST would apply. Conversely, HST would apply to any amounts due or paid on or after April 1, 2013.
GI-137, “PEI Transition to the HST – Memberships”
The transition rule for memberships is similar to the rules for services with the same cut-off dates. When 90% or more of the membership period is before April 2013, only GST would apply.
When more than 10% of the membership period is on or after April 1, 2013, the following rules apply:
- GST would apply to any payment on or before November 8, 2012; and
- GST would apply to any payment after November 8, 2012 and before February 2013.
When an amount becomes due or is paid without having become due on or after February 1, 2013:
- GST would apply to any amount that relates to the portion of the membership period that is before April 2013; and
- HST would apply to any amount that relates to the portion of the membership period that is on or after April 1, 2013.
Lifetime memberships acquired after November 8, 2012 (but before April 1, 2013) are subject to HST on the amount exceeding 25% of the total amount of the lifetime membership.
GI-138, “PEI Transition to the HST – Passenger Transportation Services”
The application of GST or HST for passenger transportation services hinges on whether the ticket or voucher issued forms part of a “continuous journey”.
If the continuous journey starts prior to April 2013, GST will apply. If the continuous journey begins on or after April 1, 2013, the following rules will apply:
- GST would apply to any amount that becomes due (or is paid without having become due) on or before November 8, 2012;
- GST would apply to any payment after November 8, 2012 and before February 2013. Certain purchasers would be required to self-assess the 9% provincial component of the HST; and
- HST would apply to any payment on or after February 1, 2013.
This document contains several examples to help illustrate whether GST or HST will apply.
GI-139, “PEI Transition to the HST – Admissions”
If 90% or more of an event occurs before April 1, 2013, only GST would apply to the payment due (or paid without having become due). However, if 10% or more of the event takes place on or after April 1, 2013, then the following rules would apply:
- GST would apply to any amount due or paid on or before November 8, 2012.
- When an amount becomes due or is paid without having become due on or after February 1, 2013:
- GST would apply to any amount that relates to the portion of the event that takes place before April 2013; and
- HST would apply to any amount that relates to the portion of the event that takes place on or after April 1, 2013.
Details on the rules clarifying who would account for the tax, and when it would be accounted for, when more than 10% of the event takes place on or after April 1, 2013 are discussed in this document.
This document also includes useful appendices, including one with a flowchart demonstrating the rules for admissions during this transitional period.
GI-140, “PEI Transition to the HST – Freight Transportation Services”
The application of GST or HST for freight transportation services depends on the following:
- whether the freight transportation service is in respect of a continuous freight movement;
- when the shipper transfers possession of the goods being shipped to the first carrier engaged in the continuous freight movement;
- when an amount payable for the service becomes due; and
- whether an amount is paid without having become due.
GI-141, “PEI Transition to the HST – Transportation Passes”
This info sheet describes whether the GST or the HST would apply to a taxable sale of a transportation pass made in PEI, where the pass period includes the April 1, 2013 implementation date for the HST in PEI.
GI-142, “PEI Transition to the HST – Prepaid Funeral and Cemetery Arrangements and Interment Property”
This info sheet explains how the implementation of the HST in PEI will apply to funeral or cemetery services supplied under a prepaid arrangement in the province.
The determination of whether GST or HST applies to funeral or cemetery services supplied under a prepaid arrangement will depend on the following:
- when the prepaid arrangement was entered into;
- whether there was reasonable expectation at the time the prepaid arrangement was entered into that all or part of the consideration for the funeral or cemetery services would be paid before the individual’s death; and
- when the funeral or cemetery services under the prepaid arrangement are provided.
GI-143, “PEI Transition to the HST – Tour Packages”
This info sheet addresses how to calculate GST/HST on a tour package sold on or after February 1, 2013 and before April 2013, where elements of the package are supplied during the period that straddles the April 1, 2013 implementation date of HST in PEI.
The info sheet illustrates the steps tour operators should follow in determining the taxable and non-taxable portions of a tour package and whether GST or HST would apply to each taxable portion. However, the HST transitional rules that would apply to each element of a tour package are not discussed in this publication.