A number of readers of the HST Blog have asked whether the Ontario HST Transition Support Payment for Small Businesses is subject to income tax. The answer is "yes" - sorry to be the bearer of bad news. I was informed a number of months ago by a representative of the federal Department of Finance that the payment is subject to income tax and that the Ontario negotiators were/are aware of this interpretation.
So, please make sure that you make a record of the payment for 2010 income tax calculation purposes. The reality is that th tax authorities will know about the payment to you - so, please do not forget it (even if it is really small).