HST stands for “harmonized sales tax”. A harmonized sales tax is otherwise known as a consumption tax, which is a tax levied on spending (think of goods and services). Typically, this tax is used in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) are combined to become a single “value added” sales tax.
What is HST in Ontario?
In Ontario, the current rate of HST is 13%.
What Goods and Services does HST apply to in Ontario?
The following are some examples of taxable supplies:
- Sales of new housing;
- Sales and rentals of commercial real property;
- Sales and leases of automobiles;
- Car repairs;
- Clothing and footwear;
- Legal and accounting services; and
- Hotel accommodation.
Some supplies are considered to be zero-rated – meaning that HST applies at a rate of 0%. Therefore, while GST/HST wouldn’t be charged on these supplies, you would still be able to potentially claim input tax credits for the GST/HST paid or payable on either services or property acquired in order to provide these supplies.
The following are some examples of zero-rated supplies:
- Basic groceries, such as milk, bread, and vegetables;
- Most farm livestock;
- Most fishery products, such as fish for human consumption;
- Prescription drugs and drug-dispensing services;
- Certain medical devices, such as hearing aids and artificial teeth; and
- Feminine hygiene products.
For more examples, please see the CRA website found here.
Are there Exemptions to HST in Ontario?
There are various items that are typically exempt from HST. This means that no GST/HST applies to them. While this aspect is similar to a zero-rated supply, the difference with these items is that you are generally not entitled to claim input tax credits on property and services acquired to provide these supplies.
Below are some examples of exempt supplies:
- Resale of an existing home (renovations are taxable, however);
- Household goods, such as children’s clothing and shoes, car seats, diapers;
- Legal aid services;
- Child care services, where the primary purpose is to provide care and supervision to children 14 years of age or under for periods of less than 24 hours per day;
- Long-term rentals of residential accommodation (of one month or more) and residential condominium fees;
- Feminine hygiene products;
- Music lessons; and
- Many educational services, such as tutoring services made to an individual in a course that follows a curriculum designated by a school authority.
For more information on the harmonized sales tax and how it might impact your spending and potential input tax credits that you may be eligible for, contact us for more information!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.