May 13, 2010
Page B2 T cjnews.com
By RITA POLIAKOV
It’s coming for you. For renters and owners, for sellers and buyers. For reno-vators and mechanics, for electriciansand landlords. Some call it a saviour for Canadian businesses, others insist it’s just another tax hike. Either way, comeJuly 1, the governments of Ontario and British Columbia will introduce the har-monized sales tax (HST).
What is it?
The HST will combine the provincialand federal taxes into a single, blended sales tax. In Ontario, it will amount to13 per cent on many goods and services – eight per cent for the provincial portionand five per cent for the federal portion,now known as the GST – while in BritishColumbia, it will be a 12 per cent tax.
According to the government of On-tario’s website, businesses are payingabout $4.5 billion in embedded taxes because of the provincial sales tax, whichis applied to the production, distributionand retail level of all businesses, makingit a tax on a tax on a tax. The HST willeliminate this by providing a credit for sales tax.
For example, if an electrician has to pay HST on electrical outlets, he or shewill get a tax credit for the provincial tax paid. The Ontario and B.C. governmentshope that this will make businesses in their provinces more competitive and thereforecreate more jobs and opportunities.
The HST has already been implement-ed in Nova Scotia, Newfoundland and Labrador and New Brunswick. In NovaScotia the provincial portion of the HSTwill increase from eight per cent to 10 per cent on July 1, making the total HST15 per cent.
What about me?
According to Matthew Thornton,manager of government relations for theOntario Real Estate Association, hom-eowners will be hit hardest by the newtax reform.“The HST is certainly a bad thing for homeowners in particular,” Thorntonsaid. “These are the people who will be bearing the brunt of the tax. It’ll makenot only buying, but owning a home dif-ficult.”This, said Thornton, is because hom-eowners will now have to pay the provin-cial portion of the HST on a multitude of goods and services that weren’t subject to provincial sales tax before. These includelawyer fees, realtor fees, home renova-tion labour, and home heating, electricityand natural gas fees.To offset these additional fees, thegovernment of Ontario will be providingtransition rebate cheques. Couples and single parents making less than $160,000will receive a rebate of $1,000 over three payments and single people making lessthan $80,000 will receive $300.
What if I want to buy a house orcondominium?
The HST will only apply to the priceof new houses or condominiums, whichmeans that the price of existing houseswon’t be affected.Still, this doesn’t mean potential buyers of existing homes are off thehook, said Cameron Muir, chief econo-mist of the British Columbia Real EstateAssociation.
“The HST is going to have an impacton home transactions,” he said. “[Buyers]are going to have to pay [more] on homeappraisals and real estate commissions.”
Condo maintenance service fees willalso be affected by the HST.Buyers of new houses won’t haveto pay HST for homes costing up to$400,000 in Ontario, where the govern-ment will be providing a rebate of up to$24,000 for those buying newly builthomes. HST will be charged for housescosting more than $400,000. This meansthat, if a new house costs $500,000, the buyer will be paying HST on $100,000of that amount.In B.C., buyers of new houses won’thave to pay HST on houses priced up to$525,000, Muir said.The HST is being charged on newhomes bought after June 18, 2009, inOntario and Nov. 18, 2009, in B.C. thatwill be transferred after June 2010. If buyers purchased these houses beforeJune 18 in Ontario and Nov. 18 in B.C.,they would have been exempt from thetax reform, even if they move in after June of this year.
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The HST: what homeowners need to know