Beware: Some Tips to Save HST Are Wrong
On May 12, 2010, the Globe and Mail ran a print article entitled "Tips for cheating the harmonized sales taxman". Some of the tips provided in the origin version were incorrect and have been removed in the online version.
Printed Version:
Tip 1 "Buy Now, Use Later
Even if you prepay, you still pay HST on services used after July 1. But products aren't subject to that rule. So if you know the purchase of some durable product (e.g. washing machine, fall wardrobe, camping gear) is in your near future, buy it before July 1, even if it sits unused. In fact, since HST adds 8 per cent and you can borrow money at a much lower rate, do this even if you save to take a short term loan to do so."
This advice is INCORRECT. First, durable goods, including washing machines, fall wardrobes and camping equipment, are subject to Ontario retail sales tax (ORST) at the rate of 8%. So, if a consumer buys goods before July 1, 2010, they will be paying a combined sales tax rates (GST and ORST) of 13%. Second, the transition rule applies to services and goods. If you buy a good to be delivered before July 1, 2010, ORST and GST are payable. If you buy a good before July 1, 2010 and the good is delivered after July 1, 2010, the good will be subject to GST and HST.
Printed Version:
Tip 2 "Get to Know the Internet
Look for retailers in Alberta and other "tax havens". They won't charge you HST or even PST if you have an out-of-their province shipping address. Even after paying shipping and handling, you'll save money."
This advice is also INCORRECT. Due to the HST place of supply rules for goods (also known as tangible personal property), a GST registrant in Alberta would be required to charge, collect and remit HST if the goods are shipped to an address in the HST Zone (Ontario, British Columbia, Nova Scotia, New Brunswick or Newfoundland/Labrador). if you buy goods in Alberta and pay for shipping to Manitoba, you will not be required to pay HST. However, if you live in Ontario, you will have to pay for someone to ship the goods from Manitoba to Ontario. This second shipping may wipe out any HST savings. Further, the transshipment may add risk of loss or damage to the transaction.
Printed Version:
Tip 5 "Get on the Internet
The government has a rebate program and the exempted products and services are many and varied. You can't adjust your spending until you know where the tax applies and doesn't"
This advice is also INCORRECT. The province of Ontario and the province of British Columbia have agreed to a small number of point of sale rebates (children's clothing. feminine hygiene products, books, certain prepared foods, etc.). These are necessities. They are not the types of products the involve the type of discretion suggested.
I point out these errors because the upcoming HST is hard enough on consumers. They do not need bad advice that have not been confirmed with an expert.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
I own a business in Alberta and have consumers order from me on a monthly basis from all over Canada and abroad. Do they pay HST and GST on these monthly kits? When I purchase goods from my suppliers in ON I am not charged HST, should I be?
Please advise when you have a chance as I'm finding your article the most information and this topic still confusing :)
Valerie