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March 27, 1997
(Finance)

 

Minister advises businesses on transition to harmonized sales tax system

The Parliament of Canada has passed federal legislation to establish the harmonized sales tax (HST) in Newfoundland and Labrador, Nova Scotia and New Brunswick on April 1, 1997. Under the new system which will be administered by Revenue Canada, sales taxes in Newfoundland and Labrador will reduce from almost 20 per cent currently on most goods, to 15 per cent.

Provincial Finance Minister Paul Dicks announced today that in keeping with the transition to the harmonized tax system, provincial sales tax offices in Clarenville and Grand Falls-Windsor will close effective April 25, 1997. Provincial offices will remain in St. John's and Corner Brook. Revenue Canada will establish a presence in Clarenville, Grand Falls-Windsor and Corner Brook. Details will be available at a later date.

The minister also advises that provincial Retail Sales Tax (RST) Seller Numbers, a six-digit number which gives businesses the authority to collect RST, will no longer be valid effective 12:00 a.m. April 1, 1997. Businesses requiring more information on how to register for the new HST should telephone Revenue Canada at 1-800-959-8286. However, all businesses registered for the GST will automatically be registered for the HST.

It is anticipated that the Department of Finance will require approximately four years to complete the required RST audits. Collection efforts will continue until all RST has been collected. During this period, all penalties and interest will apply.

Individuals requiring more information on provincial tax matters should contact the St. John's office at 1-877-729-1695, or write the Department of Finance at P.O. Box 8720, St. John's, NF, A1B 4K1.

Contact: Karen McCarthy, Director of Communications, (709) 729- 0110.

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HST Highlights
for Businesses in Newfoundland and Labrador

WHAT'S NEW?

  • The new harmonized sales tax (HST) will have a single tax base, a single combined rate and a single administration (Revenue Canada). Starting April 1, 1997, businesses buying or selling taxable (other than zero-rated) goods or services in Newfoundland and Labrador, Nova Scotia and New Brunswick will have to pay or collect 15 per cent HST. Registered businesses outside the three participating provinces that sell taxable (other than zero-rated) goods and services in the three provinces, including any goods or supplies shipped or mailed to the region, will also have to collect HST.

    Registrants can claim input tax credits for the seven per cent GST or 15 HST payable on purchases for their commercial activities. Those who pay 15 per cent HST but are not entitled to full input tax credits may be eligible for rebates.

    Goods are considered to be sold in a participating province if they are delivered or made available in that province (including by common carrier, mail or courier). Special rules apply to rented or leased supplies. Generally, a service is considered to be provided in one of the three participating provinces if 90 per cent or more of the service is performed in that province.

WHAT'S THE SAME?

  • Under the HST, a number of things remain the same:
  • HST applied to the same base of goods and services as GST.
  • Goods and services that are exempt and zero-rated goods under the GST will be exempt and zero-rated under the HST.
  • Businesses already registered for GST are automatically registered for HST.
  • As with GST, businesses with annual revenues of $30,000 or less from taxable sales, generally do not have to register for or collect HST.
  • Requirements for remitting tax, filing returns, and establishing fiscal and reporting periods stay the same under the HST.
  • Businesses do not have to report separately for federal and provincial parts of HST.
  • Businesses can generally use the current GST returns to calculate the net amount of HST owing or to be refunded.
1997 03 27 1:55 p.m.

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