Bed Bugs and HST
The bed bug extermination business is thriving (not good for renters, home owners, hotel operators and others, but good for pest control service providers).This post is for the pest control service providers. I was recently asked which place of supply rule applies to pest control services. The person asking had incorrectly assumed that the general HST place of supply rule applied.
The correct answer is that the HST place of supply rule for services in respect of real property will apply to most (if not all) pest control services. The service provider must go to a particular building to undertake the actions to rid the place of the bed bugs. The service provider goes to a home, an apartment building, a hotel, a condominium building, a nursing home, or a theatre. These places have particular locations.
Based on the HST place of supply rules, if the place is located in an HST province (e.g., Ontario), HST would apply to the amount charged for the service. If the place is located outside an HST province (e.g., Quebec), HST would not apply (but GST would apply if the place is in Canada) to the amount charged for the service. If the place is located on a reserve, then the point of sale rebate would apply.
Bed bug exterminators should clearly identify on their invoice the location at which the services were performed. This will help the HST auditor apply the HST place of supply rules correctly and assess the correct rate of GST/HST.
For persons located in Ontario and British Columbia, pest control services were not taxable under the provincial sales tax regimes of either province. Many persons who are recipients of pest control services are consumers and, therefore, are not able to recover the HST by way of an input tax credit. Landlords, for example, cannot recover HST paid on pest control services in rental properties. Another good example is a home owners is the final consumer and cannot recover HST paid on bed bug removal - even if the bed bugs arrived from a foreign hotel.
Bed bugs and other pests may carry diseases and cause health issues, but the extermination services are not considered to be health care services. People (and parents) must pay the HST to protect their families from bed bug bites and health issues.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
