More Horror Flicks - CRA Web Cast on Transition Rules on Supply and Install Contracts
The Canada Revenue Agency has released a WebCast on harmonized sales tax (HST) transition rules for supply and install contracts that straddle the July 1, 2010 HST implementation date. This WebCast is intended to help supply and install businesses in Ontario and British Columbia.
An example in the WebCast relates to the installation of a home theatre system. However, the example presumes that the equipment is delivered to the home on June 30, 2010 and installed on July 2, 2010. This is not a typical scenario supply & install contract.
Another example relates to the provision of a computer program on June 15th and training is supplied in July 2010. Again, not a typical supply and install situation in an Ontario retail sales tax context.
Under the ORST regime, some businesses in Ontario and British Columbia currently do not charge ORST or BCSST because in their business tangible personal property becomes real property upon installation. A carpet installer would supply installed carpet and no ORST is payable (but the installer pays ORST on its purchases and builds it into the price of the installed carpet). A kitchen design store/contractor may supply installed kitchen cabinets, kitchen counters, a sink, tiles and appliances and not charge ORST to the homeowner (but the supplier pays ORST on its purchases and builds it into the price of the installed kitchen). These scenarios are not adequately addressed in the WebCast.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
