Official HST Transitional Rules Announced To Begin Phasing Out

HST Transition RulesThe big buzz in BC right now is centered around the HST transitional rules for the tax’s elimination in the province after a short reign. Overwhelming public outcry led to a referendum resulting in favour of cutting the controversial tax and now the real confusion has begun for many businesses.

The HST is a combination of the 5% federal tax and a 7% provincial tax that will be replaced by its predecessors, GST & PST, on April 1, 2013. The changes released by the province will affect home builders and their customers and BDO Canada has addressed this in a separate tax alert.

The following is quoted from BDO’s article:

According to the information released, the general HST transitional rules will operate based on when the tax in respect of the supply becomes payable under the HST rules, as follows:

  • HST applies if tax is payable or is paid before April 1, 2013.
  • GST (and presumably PST where applicable) applies if tax becomes payable after March 31, 2013 without having been paid before April 1, 2013.

Generally, tax becomes payable on the earlier of the following dates:

  • Date of the invoice (unless there was an “undue delay” in issuing the invoice, in which case the date the supplier would have issued the invoice but for the delay); or
  • The day the purchaser is required to pay pursuant to a written agreement.

HST Transition RulesThe CRA document outlining HST transitional rules has also included comments on the following topics:

  • Financial Institutions
  • Pension Plans
  • Taxable Benefits
  • Streamlined Accounting Methods (e.g., Quick Method)
  • Refunds and Rebates
  • Returns and Exchanges
  • Basic Tax Content
  • Tax on Self-Supplies of Subsidized Housing
  • Performance Bonds

For all the details on the HST transitional rules and how the transition from HST to PST will affect new homes, check out this tax alert article by BDO.

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