HST Update for Ontario and British Columbia
On July 1, 2010, Ontario and British Columbia implemented a harmonized sales tax (HST) which applies to most transactions and purchases in those provinces.
By implementing the harmonized sales tax, Ontario and British Columbia joined New Brunswick, Nova Scotia and Newfoundland and Labrador, in integrating their provincial sales taxes with the federal goods and sales tax (GST).
As of July 1, 2010, the HST for the provinces is:
- Ontario 13%
- British Columbia 12%
- Nova Scotia 15%
- New Brunswick and Newfoundland and Labrador 13%
Impact of HST on Group Policies and Plans
The impact of the HST on Group Plans and Policies will depend on the funding arrangement in place.
- Plan member
- Administrative Services
- Administrative Services
The HST will not apply. However in Ontario, the Retail Sales Tax of 8% will continue to apply.
Only With No Stop Loss Coverage The HST will apply to the administrative fee, but will not apply to the claims costs. In Ontario, the Retail Sales Tax of 8% will apply to the claim costs for individuals employed in Ontario.
Only With Stop Loss Coverage The HST will not apply. However in Ontario, the Retail Sales Tax of 8% will continue to apply to the claim costs for individuals employed in Ontario.
Place of Supply Rules
The place of supply rules determine in which province the supply of the service was deemed to have occurred and which tax rate should apply as a result.
Previously, the place of supply rules were based on where the service was performed.
The Department of Finance has now announced changes to the place of supply rules. Effective July 1, 2010, the place of supply rules are based on the contracting address of the group policy or plan.
As a result of this change, a policyholder whose contracting address is Ontario will be charged the 13% HST on ASO fees, while a policyholder whose contracting address is British Columbia will be subject to the 12% HST.
We are aware that there are ongoing discussions regarding the place of supply rules. We are following these discussions and will inform you of any change to the place of supply rules that may occur.
Opportunity to Recover GST/HST
If the policyholder is a GST/HST registrant, the policyholder may be able to recover the GST/HST it pays on purchases and expenses by claiming the Input Tax Credit (ITC) on its GST/HST return.
To determine their ability to recover GST/HST, policyholders should contact their tax advisors for details.
If you have questions regarding the implementation of the HST in British Columbia and Ontario, please contact your benefits advisor or your Industrial Alliance group account executive.