Harmonized Sales Tax — Timing Your Tech Purchases

Ontario and BC recently announced that they will harmonize their provincial sales tax (PST) with the federal goods and services tax (GST) effective July 1, 2010. In BC, the harmonized sales tax (HST) will apply at the rate of 12 per cent, compared with 13 per cent for Ontario and the other GST-harmonized provinces (Nova Scotia, New Brunswick, and Newfoundland & Labrador), and will be recoverable to the extent the recipient of the supply is fully engaged in commercial activities.

The HST will apply to the same tax base as the GST, with some limited point-of-sale rebates on the provincial portion for a few products. The major benefit of harmonization is that it will eliminate unrecoverable PST for most organizations in these provinces. Currently, organizations pay PST on a broad range of goods (and a limited range of services) acquired in or imported into the province, unless they qualify for a specific exemption such as the production machinery and equipment exemption.