The Canadian Convenience Stores Association

An update from the HST communication division of the Ontario government for our members to find out any additional information you may need as this province inches it’s way to the HST implementation date of July1, 2010.

With the implementation of the Harmonized Sales Tax (HST) nearly here it is important to learn about how the HST will affect your business. Do you know the facts? Are you HST ready? This article contains useful information about the HST and Ontario’s comprehensive tax package, the benefits for businesses and important information about transitional rules that will apply.

Take a Closer Look At Ontario’s Tax Relief for Retailers:

It is important as a retailer to keep up with an ever-changing market. When your market changes so must you. The government is no different. We have witnessed the biggest global down turn in 80 years. The world has changed and so will we.

Ontario has chosen to take action by introducing a comprehensive tax package that will revise our tax system, creating more jobs and a stronger more competitive economy while providing significant tax cuts for individuals, families and businesses.

The comprehensive tax package includes tax cuts as well as the introduction of the harmonized sales tax (HST) which combines Ontario’s Retail Sales Tax (RST) with the Federal Goods and Service Tax (GST) to create the single, federally administered value-tax at a rate of 13 per cent.

It’s a big change that will have an even bigger effect on all Ontarians.

Because of these tax changes, Ontario businesses like retailers will benefit from the removal of about $4.5 billion a year in hidden sales tax from replacing the RST with the HST, once fully phased in and they will also see additional tax relief starting July 1, 2010.

Business Tax Cuts

Additional Tax Relief

• Cut the CIT from manufacturing and processing from 12 per cent to 10 per cent
• Cut the CIT rate for small businesses from 5.5 per cent to 4.5 per cent
• Eliminate the small business deduction surtax and
• Exempt more small and medium-sized businesses from the Corporate Minimum Tax
• When fully implemented, the retail trade industry will save almost $265 million a year from replacing the RST with the HST, $100 million annually from the CIT cuts and nearly $55 million a year from eliminating the Capital Tax.
• Help from the Government
• Transition support has been put in place for small businesses to help them with any additional costs during the transition. Most small businesses will be eligible for a transition credit of up to $1,000.

What will HST mean for Retailers

Currently, Ontario retailers collect both GST and RST. They also pay RST when they purchase point-of-sale equipment, non-custom software and store fixtures and displays.  Starting July 1, 2010, the HST will follow the same rules as the federal GST. This means that operating costs will be lower for retailers because they can claim an input tax credit for the HST paid on a purchase.

It is estimated that because of HST retailers will save more than $500 million a year in administrative and compliance costs.

Savings for retailers

HST is great news for retailers. It will eliminate layers of embedded provincial sales taxes that are hidden in the purchase price, making inputs cheaper.  Retailers will save from the reduction of embedded tax in supplier prices and will have the convenience of only having to file one sales tax return, make one sales tax payment, have one point of contact and follow one set of rules.

Gary Rygus, Director, Retail Council of Canada said, "RCC believes that tax harmonization will decrease the administrative burden on retailers, allowing them to be more competitive. It is crucial for retailers that they continue to have the freedom to show the tax at the point of sale. This will allow Ontario retailers to remain price-competitive with their counterparts in neighbouring jurisdictions."

Exemptions for Consumers

Consumers won’t be required to pay the 8 per cent Ontario portion of HST on certain items, as exemptions will apply to items like:

• Books,
• children’s clothing,
• footwear,
• diapers,
• feminine hygiene products,
• newspapers,
• food,
• many other items.

For years, businesses have been seeking a more efficient and modernized tax system that wouldn’t leave them at a competitive disadvantage in comparison to other provinces and countries. This modern, comprehensive tax package will help attract investment and jobs, creating a prosperous future for all Ontarians.

Need More Information?

Visit ontario.ca/taxchange for more information about our comprehensive tax changes, and the benefits for your business. The Canada Revenue Agency (CRA) is also a great source with important up to date information about how transitional rules apply and how to get ready for the HST. Visit the CRA’S “Are You HST Ready ” website.

Click Here to read an interesting news article regarding how HST may impact the c-store industry.