The HST takes effect in Ontario on July 1, 2010!
What does this mean for your restaurant!
- The HST affects all GST Registered businesses.
- In exchange for adopting the HST the Ontario government will be providing $4.5 billion in corporate income tax cuts over the 3 year period starting July 1, 2010. The general Corporate Income Tax (CIT) rate will be lowered from 14% to 10% by 2013. The small business CIT rate will be cut from 5.5% to 4.5%. Capital Tax will be eliminated completely on July 1, 2010.
- Effective July 1, 2010 Ontario PST will be eliminated and replaced with Federal HST that is made up of two components: 5% (Federal Portion) + 8% (Provincial Portion) = 13% HST.
- What was taxable for GST will generally be taxable fro HST (i.e. if something has 5% GST on it today, there is a high probability that it will have 13% GST on it after June 30, 2010.
- Generally, HST if fully recoverable by businesses as an Input Tax Credit (ITC).
- Temporary restricted input tax credits for large businesses (annual sales in excess of $10M annual sales)
- Generally self assessing goes away with HST.
- Cash incentives are in place in Ontario for small businesses for transition to the new tax ( less that $2M in annual sales).
- One tax, one return, one administration and one audit.
- Meals less than $4.00 effectively remain exempt of the provincial portion (8%) of the tax.
Purchase of a piece of restaurant equipment worth $500.00
The way it works today, before HST come into effect:
- Cost $500.00 + 5% GST + 8% PST = $565.00.
- $25.00 in GST is recoverable so actual cost is $540.00
After July 1, 2010 when the HST is in effect:
- Cost $500.00 + 13% HST = $565.
- All of the HST ($65.00) is recoverable so actual cost = $500.00 a saving of $40.00
- Consult your tax professional for specific questions regarding your business and the HST.
- Talk to your Findlay Sales Rep to discuss if menu opportunities may exist to take advantage of the $4.00 "prepared food exemption."
- The $4.00 food exemption reduces the tax to just 5% (same as GST) on meals where the total pre-tax price is $4.00 or less.
- Go through construction contracts that span the introduction of HST - make sure there is a clause in your contract concerning the HST and that the savings realized by the HST for the contractor are passed down to you.
- Try to delay any planned construction until after the HST been implemented.
Links to HST Info, Documentation and Government Websites & Contact Numbers
Canada Revenue Agency at 1-800-959-5525
- Canada Revenue Agency HST Info
- Ontario Ministry of Revenue - Harmonized Sales Tax in Ontario
- Ontario Releases HST Transitional Rules
- Certified General Accountants of Ontario - HST Fact Sheet
- Point-of-Sale Rebate on Prepared Food and Beverages
- HSTCANADA - Can HST Benefit Restaurants?