Another Canada Day and more changes to Canada’s sales tax rates. We seem to like to pick the mid-year point to implement sales tax rate increases.
Canadian Sales Tax Rates Chart
As at January 1, 2016
|Province/Territory||Provincial Sales Tax||GST/HST Rate||GST Included in PST Tax Base||Combined Rate|
|Prince Edward Island||N/A||14%||Yes||14%|
The HST rate for Newfoundland/Labrador increased to 15% from 13% effective July 1, 2016.
The HST rate for New Brunswick increased to 15% from 13% effective July 1, 2016.
The ITC recapture rate in Ontario decreased to 50% as of July 1, 2016.
The HST rate for Prince Edward Island will increase to 15% (from 14%) on October 1, 2016.
Steps To Take
- Are you charging the correct amount of sales tax?
- Sales departments/accounts receivable departments that have programmed HST-included pricing will need to update the sales tax rates in their systems.
- Even companies that calculate sales tax separately will need to make sure that computer programs have been updated.
- Are you paying the correct amount of sales tax?
- Payroll departments will need to review invoices in the months following the sales tax increases to ensure that they are being charged the correct amount of sales tax.
- This means not paying the higher rate for property and services provided before July 1, 2016 and paying the higher rate, if applicable, after July 1, 2016.
- Are you claiming the correct amount of ITCs?
- The finance department will need to make sure that computerized programs that break out the amount of HST payable on invoices have been updated to reflect the higher HST rates.
- Are Ontario businesses not giving too much back?
- The ITC recapture rate in Ontario has decreased to 50% from 75%. This means the amount of ITCs that companies can claim may have increased for some large businesses.
- Have you updated your computerized records to reduce the recapture rate?
For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at firstname.lastname@example.org. Alternatively, visit www.lexsage.com.