managing the harmonized sales tax - mnp · pdf filecash-flow impacts so you can improve the...

In an effort to achieve greater efficiencies, the provincial governments of Ontario and British Columbia are harmonizing theirrespective sales tax with the federal Goods and Services Tax (GST). While the provinces tout the benefits of combining the taxes, suchas reducing compliance costs and attracting new investment and jobs, there are some specific issues that will impact you and yourtransportation business. Here’s what you need to know.

THE FACTSIf you are registered for GST, you are automatically registered for the Harmonized Sales Tax (HST). This combined tax iscomparable to the HST that exists in the Maritime provinces that harmonized their sales taxes with the GST more than a decadeago. Effective July 1, 2010, B.C.’s and Ontario’s Provincial Sales Tax (PST) will be eliminated and replaced by the HST. From thisdate forward, all sales of goods, services, certain real property and intangibles “supplied” in B.C. will be taxed at 12% HST; whileOntario will be taxed at 13% HST.

HOW THE TRUCKING INDUSTRY WILL BENEFITEliminating separate provincial sales taxes and harmonizing these with the federal GST is mostly good news for businesses. Theunrecoverable PST imposed on many of your operating and capital expenses will be replaced by the HST. As with GST, the HST isrecoverable through Input Tax Credits (ITCs). Transitioning to the HST will also benefit businesses with simpler, less expensiveadministration costs, including:

> Reduced paper work for businesses now collecting PST and GST> Single tax charged and paid to CRA> One combined sales tax return> One government authority to deal with

MANAGING THE TRANSITIONTo maximize the benefits and tax savings, it’s critical you start planning now. To ensure you effectively manage the transition, it’s importantto work with a professional who understands your unique situation. Some of the areas your advisor will discuss with you include:

> Effectively updating your IT systems> Determining whether you should accelerate or defer major purchases > Reviewing whether your existing contracts will be affected by transitional provisions> Complying with supply rules pertaining to shipments across provincial boundaries > Reviewing cash flow as goods that were formerly exempt from PST may be subject to HST

Chartered Accountants & Business Advisors

Managing the Harmonized Sales TaxWhat the Trucking Industry Needs to Know

HST BC FS Trucking 011810_Fact Sheet 10-01-18 11:56 AM Page 1

HOW MNP CAN HELPThe rules surrounding the HST transition are complex. That’s why it’s important to work with a professional who can help youunderstand the rules, set up the proper systems, and take advantage of all the tax savings. Working closely with you, MNP canperform a diagnostic analysis, establish priorities for necessary systems and process changes, and help you minimize cost and cash-flow impacts so you can improve the performance of your business.

ABOUT MNP MNP is one of the largest chartered accountancy and business advisory firms in Canada. For more than 60 years, we have proudlyserved our mid-market clients in the public and private sectors. Through partner-led engagements, we provide a cost-effectiveapproach to doing business and customized strategies to help you achieve your goals.

To find out what MNP can do for you, contact your local MNP Advisor or call Heather Weber, CGA, Indirect Tax Services Leader at 1-877-766-9735 or e-mail heather.weber@mnp.ca.

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