HST FOR WRITERS

Ontario and British Columbia HST Information for TWUC members

The provinces of Ontario and British Columbia have enacted legislation to implement the harmonized sales tax (HST), which will replace existing provincial sales taxes and the federal goods and services tax in those provinces beginning July 1, 2010 and will be administered by the Canada Revenue Agency.

Key Dates

July 1, 2010 - Harmonized Sales Tax will take effect in Ontario and British Columbia

Starting May 1st HST must be charged on goods/services to be delivered after July 1, 2010. If you are invoicing in advance for a reading that is going to take place after July 1, 2010 you must charge HST on that reading.

Starting July 1st HST must be charged on goods/services.

Do I have to register?
Businesses that are registered for GST will be required to collect the HST. Your GST number will become your HST number. You don’t have to do anything.
Just as with GST, businesses with total taxable sales of $30,000 or less will not be required to register and collect HST.

INFORMATION FOR MEMBERS WHO ARE GST/HST REGISTERED

Your GST/HST Number
If you are GST registered your GST number will become your HST number. You don’t have to do anything.

Gains from HST implementation
Items that had GST and PST will continue to be taxed at 13% in Ontario and 12% in British Columbia but you will now get an input tax credit on the provincial portion.

E.g. Today if you purchase a computer for $1,000 you would pay $50 GST and $80 PST in Ontario and $70 PST in British Columbia. You can claim back the $50 as an Income Tax Credit (ITC) but not the $80/$70 PST. However, if you buy a computer after July 1, you will be able to claim back the full $130/ $120 in harmonized sales tax.

Losses from HST implementation
Items that were GST-only will now be taxed at 13% in Ontario and 12% in British Columbia.

e.g. Currently an author who is GST registered and does a reading in Ontario or British Columbia before July 1, 2010 and charges $500 for the reading will have to charge an additional $25 in GST. After July 1st the author will have to charge an additional $65 HST in Ontario and $60 HST in British Columbia.

A Note about HST
For the most part HST will be a single tax of 13% in Ontario (12% in B.C.). The tax consists of two components: the “Federal HST” of 5% and the “Provincial HST of 8% in Ontario (7% in B.C.). This distinction may be relevant in certain circumstances.

Government Work
Currently the Ontario and British Columbia governments do not pay GST and the Federal government does not pay PST. Under HST the federal and Ontario/ British Columbia governments will pay HST.

If you sell or provide services to the government, beginning July 1, 2010 you will charge them HST.

Administration – As of July 1st
You will charge 13% Ontario (12% in BC) HST on all sales and services. You will need to track this income so you can file and pay your HST remittance.

You will track 13% Ontario (12% in BC) HST paid on purchases. You can then claim this amount as an input tax credit against the HST you have collected.

You will want to keep careful track of the HST as the increased tax amount will result in increased money in your bank account much of which you may have to remit to the government. You may want to consider filing your taxes more frequently to keep a close eye on your cash flow.

If you have clientele in more than one jurisdiction you may want to continue to keep your GST account open and create a new HST account. This way you can keep track of payments that have HST as well as those that are from provinces which do not have HST and continue to charge GST.

Your invoices and other documents must now say HST.

The HST return form has not yet been released. We don’t yet know what, if any, change there will be to the tax return.

There is a one time transitional tax credit for small businesses, up to $1,000, based on tax volume. The details are not yet available. If you are eligible this tax credit will be claimed on your tax return. It will NOT be available for late returns. File on time.

Place of Supply Rule
When to charge HST and when to charge only the Federal Portion of HST will depend on the place of supply rule. For services the rules are generally based on the home or business address of the recipient.

e.g. An author living in Alberta is writing a book for an Ontario publisher. While most of the work may take place in the author’s home in Alberta, the business address for the publisher is in Ontario and so the place of supply is considered Ontario. HST at 13% will have to be charged.

e.g. An author living in British Columbia agrees to do a reading in Manitoba. Since the reading takes place in Manitoba the author charges 5% GST (Federal HST).

Exceptions
The sale of books are exempt from Provincial HST. Only the Federal HST (5%) will apply to these sales. See the Government’s Information sheet at: http://www.cra-arc.gc.ca/E/pub/gi/gi-065/gi-065-e.pdf

If you are selling your books you will charge the Federal HST (5%) for the sale of the books but you will not need to charge Provincial HST (8% in Ontario) (7% in BC). The provincial portion of the HST does not apply when you sell books in provinces that already have HST (e.g. New Brunswick, Nova Scotia, and Newfoundland/Labrador.

Royalties
While the buyers of books do not have to pay the provincial HST when they purchase your book, the royalties you receive from publishers and others who sell your books for you must include HST after July 1, 2010.

Important References

In BC check out http://www.cra-arc.gc.ca/gncy/hrmnztn/bc/menu-eng.html
And http://hst.blog.gov.bc.ca/

In Ontario check out http://www.cra-arc.gc.ca/gncy/hrmnztn/on/menu-eng.html
And http://www.rev.gov.on.ca/en/taxchange/index.html

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