HST-Harmonized Sales Tax Simplified
There is a lot of confusion surrounding the latest tax (The Harmonized Sales Tax (HST)) to be forced upon the residents of Ontario. Hopefully my posting here will assist you in providing some clarity to this new tax. The following is a short summation of the HST particulars:
The HST is currently not in effect
The effective date is July 1, 2010
The HST will be 13% (based on the 8% Provincial Sales Tax and the 5% – Goods & Services Tax)
The HST will not apply on the purchase of re-sale homes
The HST after July 1st, 2010 will apply to the services associated with the purchase of re-sale homes such as real estate commissions, legal fees, moving costs, etc.
The impact on new home purchases is currently undergoing some proposed changes such as:
New home purchases across all price ranges would receive a 75% rebate of the provincial portion of the single sales tax on the first $400,000.
New home purchases under $400,000 would not pay any HST.
There is a proposal before government to rebate new residential rental properties – specifics to be determined
Contracts entered into before June 18, 2009, regardless of possession date, would not be subject to HST
The HST is currently being challenged by the Canadian Real Estate Association (CREA) and the Ontario Real Estate Association (OREA). There is some speculation that the existing hot real estate market in the central Toronto core is being partially influenced by this proposed tax, similar to the market rush driven by David Miller’s Land Transfer Tax implementation witnessed last year.
Hopefully this short blog posting provides you with some relevant information on the HST, for more information, please visit: www.fin.gov.on.ca/english/budget/ontariobudgets/2009/chpt3.html