HST - will it or won't it??

 Will the HST result in lower prices for consumers?

Prices can only go down to the extent that existing PST expense is eliminated.  Any new "PST" outlay (that is the additional sales tax amount on items and services that formerly attracted GST only) will be "expense neutral"  as the increased sales tax outlay now results in an input tax credit (ITC).  A business will be able to recover the HST that it pays in the same way that it used to recover GST.

An HST seminar I attended suggested that it will take about 2 years for price decreases to be fully realized by consumers.  My prediction is that, as the existing PST expense translates into an ITC translates into an increase in profit, the savings are unlikely to be passed on to consumers unless competitive forces demand it.  If Business A lowers its prices, Business B is forced to follow. However, only time will tell.

A definite benefit of the HST for businesses is simplification.  HST will simplify sales tax administration for businesses, obviously by replacing two taxes with one.  One tax to charge at the till instead of two, one tax filing instead of two.

HST will be administered by Canada Revenue Agency.  If you are already registered for the GST, your GST account number will be used for your HST account and the filings will look and feel pretty much the same.

For farmers, anything currently zero-rated for GST will remain zero-rated for HST.  As for other businesses, any existing PST expense (that relates to the farm operation) will now be recoverable.

Here is a link to the Ministry of Finance Website HST information:

Ministry of Finance - HST

Here is a link to CRA's webite HST information:

Canada Revenue Agency - HST

If Oldaker Consulting can help your business with the HST transition, please contact me at joldaker@oldakerconsulting.ca.

  

Income Tax Survey Results

Thank you to everybody who responded to my tax software survey.  While it wasn't Ispos-Reid, those who responded indicated that they are indeed using software to prepare their tax returns and are filing tem electronically. 

A number of different software products are in use among my respondents, including Profile, Quicktax and Future Tax, but no one that responded indicated that they used a web-based product (so these will remain a mystery to me for now), nor did anyone who responded indicate that they still used paper.

So while my survey sample size was small (but very high quality, thank you again), I think it's reasonable to conclude that CRA has managed to convince people of the benefits of filing online, that it's easier and results in speedier processing, which is particularly attractive if you are expecting a refund.