Q. Last year, I joined the ranks of the self-employed, providing interior decorating services. When do I begin charging the new harmonized tax and how does it affect my business?
— Joanne
A. Beginning July 1, 2010, businesses must collect the combined GST and RST (Harmonized tax) on most products and services at a rate of 13 per cent. Ontario joins several other provinces such a Newfoundland and Labrador, New Brunswick, Quebec and Nova Scotia that currently administer a harmonized tax.
The recent Ontario budget proposes to combine both taxes (eight per cent PST and five per cent GST) and have it administered by the federal government. For most Canadians, this will be a 13 per cent hit to the pocketbook. Next summer’s real estate transactions will be hit particularly hard. To ease the hardship for individuals, the federal government will send a $1,000 cheque to many Canadians.
Businesses may reap benefits because of the harmonization, however individuals will not. Our government may try to convince us of the benefits of harmonization, but you don’t have to be an accountant to figure it out. “It will cost me more money at 13 per cent than at five per cent.”
– Henry Choo Chong, CGA, can be reached at choochonghcga@yahoo.ca and 416-489-7800, ext. 227.
