Below are few common questions and answers on the new HST. Hope you find it useful.
What is HST?
The Harmonized Sales Tax (HST) is the harmonized value-added tax that will replace GST AND PST on July 1, 2010. The HST will apply at a rate of 13% in Ontario to taxable property and services.
Will HST apply to the same things as the GST?
In general, property and services that are taxable for GST purposes will become taxable for HST purposes. Sales of new homes and sales and leases of commercial property will be subject to the HST in Ontario. However, point of sale rebates will be available for the provincial portion of the harmonized tax on certain specified consumer goods.
What is the general impact of HST on real estate transactions?
Sales of new residential housing will be subject to HST and will qualify for GST, HST, and transitional rebates. Sales and rentals of commercial real property will be subject to HST.
On the other hand, sales of used residential housing and long-term rentals of residential housing will be exempt for HST purposes.
Will there be a HST rebate for new housing?
Yes. Purchasers of new homes in Ontario will be eligible for a rebate of 75% of the provincial component (i.e., 8%) of the HST paid to a maximum of $24,000. Sales of new homes above $400,000 will remain eligible for a maximum rebate of $24,000 (i.e., a rebate on the first $400,000 value).
What is exempt from HST?
HST will not be charged on many items that are currently not subject to PST including: Basic groceries, Prescription drugs, Some medical devices, Municipal public transit, Most health and education services, Legal aid, Most financial services, Child care, Tutoring, Music lessons, Long-term residential rents
Consumers will not have to pay the provincial portion of the proposed HST for: Children’s clothing and footwear, Children’s car seats and car booster seats, Diapers, Feminine hygiene products, Books, Prepared food and beverages sold for $4.00 or less, Print newspapers
How will HST affect my lifestyle and living expenses?
The government is providing sales tax rebates for individuals and families below a certain threshold up to $300 per individual or $1000 per family, and is lowering personal income tax rates.
What about the real estate Services?
The services (i.e. legal, taxes, etc.) associated with the purchase of a home on the re-sale market will be subject to the higher rate of tax.