Canada & Quebec May Sign HST Agreement Tomorrow
The Globe & Mail is reporting that Prime Minister Harper & Premier Jean Charest may sign a Comprehensive Integrated Tax Coordination Agreement (CITCA) (also known as an HST Agreement) on Friday, September 30, 2011. In an article entitled "Ottawa, Quebec poised to ink $2.2 billion HST deal", it appears that the agreement promised during the election campaign has been negotiated.
The question for sales tax practitioners is: How different is this CITCA going to be from the model version used with Ontario, British Columbia and Nova Scotia? It appears that Canada has agreed to a significant change. Revenue Quebec will continue to collect the tax in Quebec.
However, will Quebec loose the QST and adopt the HST? In other words, will Quebec lose its naming rights?
When is the implementation date? Businesses will need time to make necessary changes.
Also, will the HST rate go up, go down or stay the same? One benefit of harmonization is that QST should no longer be payable on the GST included amount.
What point of sale rebates (provincial exemptions from PVAT) will be selected by Quebec? Will Quebec be restricted to point of sale rebates on only 5% or will they be permitted a higher percentage of coverage for point of sale rebates?
What will happen to zero-rated financial services? Currently, under the QST regime, many financial services are zero-rated. Under the GST regime, many financial services are exempt. Zero-rated is better than exempt because the intermediary financial institutions are entitled to full input tax credits on inputs purchased for use in commercial activities (including zero-rated activities). A shift from zero-rated supplies to exempt supplies will have a significant effect on financial institutions.
For more information, please call Cyndee at 416-760-8999.
Cyndee Todgham Cherniak is the founding lawyer of LexSage, a boutique international trade law and sales tax firm in Toronto,
