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ARTICLE · 02 APRIL 2009

2009 Ontario Budget - Sales Tax Harmonization: A Reality

Blake, Cassels & Graydon LLP
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As was widely expected ahead of time, the centrepiece of Ontario's 2009 budget, released March 26, 2009, is a proposed harmonization of the retail sales tax with the federal goods and services tax (GST).

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Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Tax, April 2009

As was widely expected ahead of time, the centrepiece of Ontario's 2009 budget, released March 26, 2009, is a proposed harmonization of the retail sales tax (RST) with the federal goods and services tax (GST). The new single value-added tax is to be implemented, effective July 1, 2010. It will be federally administered and have a combined rate of 13%, with the provincial portion remaining at a rate of 8% and the federal portion at a rate of 5%.

To sweeten the deal, the federal government will provide Ontario with C$4.3-billion in cash transfer payments in two stages: C$3-billion upon implementation of the new combined tax on July 1, 2010 and C$1.3-billion on July 1, 2011.

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