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The 411on the HST

On July 1, 2010, the HST combines the 7% PST and the 5% GST into one harmonized 12% tax.

 

The proposed HST will apply to the same goods and services as the GST, with some limited exceptions. A rule of thumb is if you now pay the 5% GST on goods and services, you will pay the 12% HST on the same goods and services. The PST will be eliminated on July 1, 2010.

There will be a limited number of exemptions to the HST, including point-of-sale rebates similar to current PST exemptions. These are not paid at the time of purchase and will include basic groceries, gasoline, and children’s clothing and footwear.

 

There have been media reports indicating some goods and services previously exempt from the PST will be taxed under the HST as of July 1, 2010. These include home renovations, energy-efficient appliances and doors and windows, professional services, work safety equipment, home heating fuel, telephone, internet, cable, newspapers, magazines, bicycles, taxi fares and restaurant meals.

 

The government has not yet released specific details. We’ll keep you up to date as information becomes available.

 

Will you pay tax on more goods and services than you currently pay with the PST? Yes. The HST will apply to all goods and services currently subject to GST. Under the GST, tax is payable on more goods and services than is payable under the PST.
 
 

The HST and home buyers

New Homes

New Home - includes all taxes and federal and provincial rebates

Base new home price

Pre HST Current total new home price

July 1, 2010 on new home price - less embedded PST @ 2%

July 1, 2010 on new home price - no builder PST reduction

$350,000

$361,200

$360,980

$368,200

400,000

416,850

415,964

424,850

450,000

472,500

474,118

484,000

500,000

525,000

529,020

540,000

600,000

630,000

638,824

652,000

800,000

840,000

858,431

876,000

The harmonized sales tax (HST) will combine the 7% provincial sales tax (PST) with the 5% federal GST into one 12% harmonized sales tax (HST) as of July 1, 2010.

Right now, a buyer of a new home pays a 5% GST. Qualifying home buyers can apply for a rebate of 36% of the GST paid on the first $350,000 of the new home price, and a partial rebate for a new home price of $350,000 to $450,000.

When the HST is in force next summer, a buyer will pay a 12% HST on a new home. A buyer of a home priced at $400,000 or less will receive a rebate of 5% to a maximum of $20,000. A buyer of a new home priced at more than $400,000 will receive a flat rebate of $20,000.

  • Today, a buyer of new home priced at $600,000 will pay $630,000, which includes the 5% GST ($30,000).
  • After July 1, 2010, that same home will cost a buyer $638,824. This includes the 12% HST ($70,588) minus the $20,000 rebate and minus the embedded 2% PST ($11,765) that builders will be able to claim as new input tax credits, the value of which may be passed onto the buyer.

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