You might have heard that some Canadian provinces have recently announced a tax increase. The next upcoming increase in tax is scheduled to happen on July 1st and will affect New Brunswick and Newfoundland. In these two provinces HST (Harmonized Sales Tax) will increase by 2%, specifically from 13% to 15%.
How will this increase be accommodated in the reports and AP files you get from Cimpl? We’ll get to that question right after we explain what the raise in taxes is all about. For those who don’t know what HST is, it’s a tax found in Canada that applies to certain provinces (New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario and Prince Edward Island. These provinces are known as “the participating provinces”). HST is made up of a combination of provincial sales tax (PST) and Goods and Service Tax (GST). The provincial (PST) part of HST is increasing from 8% to 10%. Since we’ve already spoken about PST and GST, we might as well talk about QST too. If you guessed that QST stands for Quebec Sales Tax then you are correct. This tax is found in Quebec and replaces the PST. So Quebecers pay QST and GST on the goods and services that they purchase.
Businesses that have a GST/HST registration number or are required to have a GST/HST number are called registrants. Registrants are eligible to recuperate GST/HST that was paid or owed on purchases and expenses that are pertinent to commercial activities by claiming an input tax credit (ITC). Business are eligible for an ITC under the condition that their purchases and expenses were for use, consumption or supply in regards to their commercial activities. Consumers however are not eligible for ITC as the items are not used in a commercial activity. ITC are subtracted from the total amount of all the collected or to be collected GST/HST during the reporting period. The net tax can be calculated by subtracting the amount of tax collected on business taxable supplies and the ITC that are claimed including any adjustments made. This calculation may result in a GST/HST owing or a GST/HST reimbursement. It is advised that businesses add a column to the purchases and expenses side of their records in order to track the GST/HST that is owed or paid so that it may be used to calculate the ITC for each reporting period. For more information about general eligibility rules on ITC, click here.
(Please note that the following chart has been adjusted to reflect the tax increases for New Brunswick and Newfoundland scheduled for July 1st– indicated by a *)
CURRENT HST, GST AND PST RATES TABLE OF 2016
|Canada’s Province||Rate type (HST, GST, PST)||Provincial Rate||Canada Rate||Total|
|British Columbia (BC)||GST + PST||7%||5%||12%|
|Manitoba||GST + PST||8%||5%||13%|
|Newfoundland and Labrador||HST||10%*||5%||15%*|
|Prince Edward Island||HST||9%||5%||14%|
|Quebec||GST + QST||9.975%||5%||14.975%|
|Saskatchewan||GST + PST||5%||5%||10%|
So What Does The Tax Increase Mean For Cimpl?
We are already prepared to accommodate the change in Cimpl so that the taxes will be separated in the reports according to our customers’ preferences. Customers who are affected by the tax increase will have the adjustments done to the processes in order to support the new changes on July 1st.
Cimpl is dedicated in providing maximum customer satisfaction by optimizing cost saving and creating new operational efficiencies. We are leading the revolution in telecom, IT and cloud expense management. For more information about how Cimpl helps customers save money ($), save time (h) and accurately manage inventory (%), contact Cimpl.