It is unusual for the Canada Revenue Agency (CRA) to seek public comments on a difficult harmonized sales tax ("HST") topic. Take advantage of the opportunity to shape their future policy.
On September 9, 2011, the CRA released DRAFT GST/HST Notice 266 "Harmonized Sale Tax - Self-assessment of the provincial part of HST in respect of property and services brought into a participating province". The deadline for filing comments is October 31, 2011. This document is 77 pages in length, so it will take time to review and find what will not work in practice.
Financial services providers, financial institutions, multi-jurisdictional charities & non-profit organizations, universities & colleges with campuses in more than one province, long term care home providers operating in more than one province, residential real estate management companies operating in more than one province, doctors and medical professionals or management companies operating in more than one province and other exempt businesses would be affected by this draft policy. Non-resident companies also should be mindful of the draft policy if they are active in Canada and make exempt supplies.
In addition, even though the HST provinces should realize that they import supplies, they may not think of the HST consequences. Ontario, Nova Scotia, New Brunswick, Newfoundland/Labrador and British Columbia (until they stop being a participating province) should also consider how the policy will affect them.
While the policy is in draft, it will be applied going back to July 1, 2010. Also, while it is draft now, it will be finalized in the future. The CRA auditors will consider this policy to be an assessment road map. Please take the time to make sure it reflects a workable solution.
While it is self-serving for me to say this: Ask a sales tax lawyer for help in reviewing the draft policy and writing your comments. This is your chance to improve your future and you can save money in the long run if you fix the problems before the policy is engraved in stone.
For more information, please contact Cyndee at 416-760-8999.