The provincial government has decided to combine the 8% Provincial Sales Tax with the 5% Goods and Services tax, creating a 13% Harmonized Sales Tax (HST).
The HST came into effect beginning on July 1, 2010; however, please note some transition rules will apply. See the Ontario government website for specific details.
How does HST affect the consumer?
Some purchases will likely cost more because some goods and services that were not subject to the PST will be subject to the provincial portion (eight per cent) of the HST for the first time.
Internet Access Fees
Personal Services (e.g., Hairstyling)
Professional Services (e.g., Legal, Accounting and Real Estate Fees and Commissions)
How does HST affects real estate?
HST is not applicable on the purchase price of re-sale homes.
HST is applicable to services such as moving cost, legal fees, home inspection fees, and REALTORŪ commissions.
HST is applied to the purchase price of newly constructed homes. However, the new housing rebate is 75 per cent of the Ontario component of the HST, up to a maximum of $24,000. The rebate will ensure that buyers of homes priced up to $400,000 will, on average, pay no more tax than under the PST system. However, applicable PST on building supplies is embedded in the price of the home.
New homes purchased as primary residences, valued at $400,000 or more are eligible for the maximum new housing rebate of $24,000.
With regard to the lease or license of goods, including non-residential real property, HST generally applies to lease intervals or payment periods on or after July 1, 2010 and the general rules noted above will apply. However, where a lease interval begins before July 2010 and ends before July 31, 2010, it is not subject to HST.
With regard to the sale of non-residential property, HST is due where both possession and ownership of non-residential property occurs on or after July 1, 2010.
Rebates and Exemptions
The HST will not be charged on the following items that are currently not subject to PST:
Certain medical devices
Municipal public transit
Most health and education services
Most financial services
Tutoring and Music lessons
Consumers will not have to pay the provincial portion of the HST for:
Qualifying prepared food and beverages sold for $4.00 or less
Books (Including audio books) and Print newspapers